SAURABH KUMAR Better ICT infrastructure and connectivity enable South Africa to use ICTs to enable the SME sector to create 70% of new jobs
South Africa is among the top three developing countries that have the most potential to use information and communication technology (ICT) to boost their economic growth, along with China and Chile, according to the 2015 Global Connectivity Index, says information technology firm In2IT Technologies South Africa MD Saurabh Kumar.
Large-scale ICT investments can play a crucial role in fuelling the growth of South Africa’s gross domestic product (GDP) through increased economic activity, innovation and productivity.
“South Africa is already using ICT investment to power its economy. However, to reap more benefits to transcend our current challenges, government, the private sector, donors and civil society must take bolder steps to fast-track ICT development,” he explains.
Although government recognises ICT investment as an instrument that can drive economic growth, the implementation of its broadband policies has been very sluggish, he adds.
The 2015 Index measured potential improvements using indicators such as ICT patents, IT workforce, research and development, software developers and market projections for the Internet of Things (IoT), cloud, big data, broadband and data centres.
Despite the policy framework for the ICT sector to help grow the economy, broadband costs are currently estimated at between 15% and 20% of average monthly household income, which are too high for most South African households and significantly higher than the global recommended average of 4% to 5%.
According to Statistics South Africa, the ICT sector contributed R94.715-billion, or 2.9% of total GDP, to the economy in 2012. In a digital economy landscape, a 25% increase in a country’s ICT investment will result in GDP growth of about 1%. In the digital age, ICT infrastructure plays a strong role in enabling growth, notes Kumar.
In advanced developing countries, such as South Africa, upgrading from 0.5 Mb/s to 4 Mb/s increased the average family income by $46 a month; this is especially significant as it excludes other factors that could increase average income.
Enabling fast and affordable Internet access in the remotest of locations is a challenge for operators that can lay down cable in highly populated areas and typically be assured of many customers, but there are no such assurances when investing in fibre in remote locations.
Service providers need an anchor customer from which to build the foundation of their business case to invest in ICT infrastructure in the area. The benefit for government as an anchor client is that ICT enables it to provide its services for citizens and, once the fibre has been laid, citizens have easier access to high-speed broadband Internet, stimulating the local economy. This model has been successfully implemented in other countries.
“Access to fast and affordable broadband is only a first step to harnessing ICT investment for strong economic growth. The ability of people to find practical use for the services, enabled through fast, affordable ICT, and innovate to create new business is crucial,” says Kumar.
Better ICT infrastructure and connectivity enable South Africa, where the small and medium-sized enterprise sector accounts for only about 10% of jobs created, to use ICTs to move towards international benchmarks, where the sector accounts for up to 70% of new jobs created, he concludes.