Time to embrace the opportunities presented by digitisation

When looking at the impact of digital on the workforce, we need to view job creation in the emerging markets very differently. South Africa needs to embrace the opportunities for innovation and job creation. 

That’s according to Valter Adão, the Chief Digital and Innovation Officer for Deloitte Africa, commenting at this year’s SingularityU South Africa Summit that took place in Johannesburg on the 15th and 16th October.

The Summit is one of a series of high-profile two-day conferences held across the globe. Deloitte has a global strategic alliance with Singularity University (SU), a Silicon Valley-based think tank with a global presence that focuses on scientific progress and exponential technologies.

Pointing to South Africa’s unemployment rate of 27 percent and youth unemployment rate in excess of 50 percent, Adão says decision makers in both the public and private sectors need to be asking how we can leverage digital to solve the jobs problem rather than being fearful of how digital is going to take jobs away.

“The most widely held model of job creation in South Africa is still based on a low-cost labour market construct. This could be fundamentally flawed in the new world of digital that we are moving into. With additive and modular manufacturing technologies progressing at an unprecedented metabolic rate of innovation, it easy to conceive an shifting away from a paradigm of mega factories - creating economies of scale in a concentrated market - into a world of modular manufacturing, a world of manufacturing parity, where the biggest cost is going to be getting the product to the consumer.”

He cites the example of the South African mining sector currently beset by lay-offs. “We can’t mine as effectively as we did several years ago because our mines are so deep. If we applied automation, we would be able to keep the mines open for longer, which would be good for the economy as a whole.”

Adão says the sooner there is acceptance of the fact that change is inevitable, the sooner it will be possible to focus on the myriad opportunities presented by digital technology and remove the real stumbling blocks in the way of progress.

“Through digital we are creating platforms for people who have been typically excluded from the old economy to participate in the new economy. The barriers to entry that allow people to play in this new digital economy are access to technology – the super computer we carry in our pockets, also known as a smart, phone and free or afforble data.”

For Adão, this is not just about being able to pay for data but the ability to access it via devices, portals and hubs that are affordable to anyone, irrespective of their economic means.

He believes such access will help a new digitally-literate breed of South African micro-entrepreneurs to emerge and flourish. Exactly how this will play out is too early to say, but the shape of it can be glimpsed in three emerging trends: Collaborative Consumption, Distributed and Digital Economic Catalysts.

Collaborative Consumption is based on the construct that an individual in a poor community, could never justify or afford the ownership of an asset, e.g. a poor subsistence farmer could not justify or afford the ownership of a tractor, but if a community of poor farmers came together, the financial viability of a farm tractor changes, its ownership would easily be sustainable .  in return a community that has access to a tractor enjoys the same (economic) benefits as owning the tractor.

That’s where Collaborative Consumption in the form of digital platforms like Hello Tractor come in, enabling the benefits and cost of the asset to be shared among a number of participants.

Distributed value chains refers to the growing tendency for larger-scale businesses to outsource unprofitable or non-core functions to small businesses, often individuals. Digital platforms are springing up to facilitate this trend, with one-hour grocery delivery service Zulzi serving as a good example, as does SweepSouth and Hey Jude

Also part of the distributed value chains trend is a category of people who are generally unemployed or under skilled but have seen a gap in the market to supply services like home repairs, furniture assembly and heavy lifting and are finding customers through digital platforms like Task Rabbit.

Digital Economic Catalysts is about reviving sector by leveraging a digital platform that over time have lost their economic momentum duo lack of a networked effect and low levels of trust,. Examples of this include StokFella, a gig economy version of the traditional Stokvels, Livestock Invest, and Boombadotmobi, a digital platform created by 2 amazing entrepreneurs in Diepslop to crub illegal dumping and the repurposing of used building material,

Adão argues that for this new breed of micro-entrepreneurs to flourish, government needs to look at innovation around regulations to allow enabling platforms like Hello Tractor, Boombadotmobi, Stoffella, Hey Jude, and Livestock Invest  to take root and multiply, creating new value chains.

Going forward, government should consider incentives for corporates to automate to ensure local businesses are not left behind by nimbler global competitors.

“Research shows that companies that have started to implement digitisation could experience up to double digit savings. The longer we wait, the bigger the gap will grow between countries and corporates who are exponentially more productive through digitisation.”