US technology giant Cisco is bullish about its prospects in SA and the broader African continent, even as a new government is set to take over in the US — a move that may affect trade relations.
Over the years, US foreign policy has had an impact on how the country’s companies trade and do business globally. Where friendly relations exist, US business have tended to thrive. However, the opposite is also true. Most recently, frosty relations between the US and China have limited the ability of US companies to do business in that lucrative market, particularly around technology.
The 2019 blacklisting of Chinese technology company Huawei, for example, has meant Google cannot have an official relationship with its electronics division. This has led to Huawei being unable to access crucial Google services for its smartphones that run the Android operating system, thereby reducing their attractiveness in many parts of the world.
This tension has now spilled over into the chips and semiconductor market.
Where Africa is concerned, it’s unclear what US government posture will be in Donald Trump’s second term.
For now, trade relations with SA appear to be positive as the country secured its African Growth and Opportunity Act (Agoa) benefits for another year, allowing duty-free access to US markets in 2025.
Cisco says its plans in the region remain unchanged, and it sees the continent as strategically important to its business.
“As a company, you want to have the clarity, the engagement, the strategy, for what you do, within a within a country or a continent,” Francine Katsoudas, executive vice-president and chief people, policy and purpose officer at Cisco, told Business Day.
Valued at about $236bn, Cisco is now 40 years old and one of the world’s largest technology companies that manufactures and sells networking hardware, telecommunications equipment and other products.
“In a perfect world, you want the governments that you’re dealing with to make it easy to accelerate, to create momentum, and when you have that, it just allows you to go so much faster,” she said.
Katsoudas, who sits on President Joe Biden’s advisory council on doing business in Africa, says the biggest unknown is how the administration change could affect momentum in the region.
“What I know for sure is that the companies that I work with, like Cisco, are so passionate about Africa and the opportunity here. And we’re going to be running strategies here, separate from the administration because it’s the right thing for business.”
According to research firm Mordor Intelligence, SA’s data centre networking market, which includes major players including Cisco, is expected to grow significantly. The market reached a value of $181.6m (R3.4bn) in the previous year and is projected to register a compound annual growth rate of 13.6% between 2024 and 2030.
This growth is driven by the increasing demand for cloud computing and insight-driven business models, the firm says.
In addition, Cisco is also a key player in SA’s managed services market, which is projected to grow from $1.415bn ( R26.6bn) in 2023 to $2.056bn by 2032, according to data from Credence Research. Market growth is fuelled by increasing demand for cost-effective IT solutions and a rise in cyber threats.
“What we’re waiting to see is what is the policy, the engagement, the practices that perhaps could make it a bit easier, maybe even create incentives for some of the things that the government wants to create. We don’t have a sense of that just yet. But I do think we’re going to see companies committed to the strategies that exist today,” said Katsoudas.
Part of Katsoudas’s role at Cisco is engaging with policymakers and striking deals for the company’s projects in the region. The growth in smart cities and the infrastructure needed to make these happen is an area that Cisco sees opportunity in locally.
“The investment in smart cities and digital projects is a priority, and in the last few years we have really ramped up the digital projects that we’re doing on the continent, which we’re excited about,” she said.
“Today, we are running digital projects in over 50 countries. In many cases, we do this starting with the head of state, and the reason for that is the leader can set the tone that the organisations and the ministries need to work together because so many of the smart city projects cut across various groups.
“When we think about smart cities, what we’re looking at is how we leverage technology to streamline government services and solutions. How do we address pain points like healthcare within a country or a community, streamlining the process of getting a driver's licence and how you renew. These are some of the projects that we have and they’re all based off of this foundation of data and process.”
In 2019, Cisco partnered with SA’s department of communications & digital technologies to invest $9.2m as part of efforts to digitalise SA over a three-year period.
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