MAMONGAE MAHLARE: Guide to growth: unleashing SA’s digital potential

SMEs are crucial for addressing SA’s socioeconomic challenges, including job creation and economic transformation. To achieve inclusive growth, small businesses need the right conditions to take advantage of the digital economy. This is why I refer to the digital economy as the “great equaliser”.

SA’s digital opportunities are large — and growing. As of 2022, nearly 80% of SA’s population use the internet with estimations that this could grow to 90% by 2027. Accelerated adoption of digital technologies could triple SA’s productivity growth, resulting in up to 1.2-million new jobs by 2030. While these figures are promising, there are obstacles that could hinder the growth of the digital economy and economic development.

Addressing the growing skills gap

According to a recent ICT skills survey, SA has a skills shortage of about 77,000 high-value digital jobs and outsources an estimated 300,000 tech jobs to overseas workers. Considering the country’s youth unemployment rate of about 74%, the effect of this skills deficit becomes clear.

Closing the digital skills gap can have a significant impact, especially in the retail sector. The digital economy offers a wide range of roles, from unskilled positions to highly specialised jobs. Technical roles, in particular, are crucial for enabling non-digital positions. By closing the skills gap, more South Africans will have the opportunity to develop their own business ideas with local and international impact, as well as create a broader range of job opportunities that will drive the growth of the digital economy.

Policies and regulatory frameworks

It is essential to create an environment that fosters entrepreneurship and promotes the overall growth of the digital economy. Policies and frameworks should be established to facilitate the transcending of technologies and services across borders, enabling collective benefits from digital businesses at both local and global levels.

If we really want to have a digital economy that works for small businesses, the focus of policies and/or regulation should be on:

Ensuring affordable and fast internet access;
Improving access to reliable and affordable logistics;
Developing deep pools of technical skills;
Supporting local players who enable creation of robust local ecosystems; and
Enabling acceleration of investment in digital businesses so home-grown digital businesses can grow into international champions.

Regulations should foster the growth of all businesses in the sector, regardless of their current size. SA’s digital market is still in its early stages, lagging behind some markets by 15-20 years, making it hard to predict which businesses will become future leaders. So, regulations should be calibrated based on the stage of development of the digital market and the country's unique socioeconomic and infrastructure conditions. It’s important to consider the context of developed markets and benchmark the entire country or regional policy environment to create an environment where digital businesses can thrive.

Improving the ease of doing business in this country would be the biggest breakthrough that would greatly accelerate the development and success of SMEs.

SMEs in SA face significant bureaucratic hurdles when conducting business. In light of this, it’s worth considering whether additional regulations would truly serve their best interests. Perhaps simplifying existing regulations rather than introducing more would be more beneficial? What we do know is that improving the ease of doing business in this country would be the biggest breakthrough that would greatly accelerate the development and success of SMEs.

Combating the effect of load-shedding

Load-shedding poses a significant challenge for many small businesses in SA. To support SMEs in accessing electricity, priority should be given to those with manufacturing or operational requirements that depend on continuous power. Embracing digital transformation and e-commerce opportunities allows SMEs to operate without being affected by power outages, as online platforms remain accessible to customers at all times. This always-on marketplace is a game-changer for small businesses.

SMEs embracing digital transformation and the e-commerce opportunities that come with it no longer need to worry about whether the lights are on or not to reach consumers. If a shopper wants an item, they can order it online right there and then — ensuring that a small business can still make sales and minimise lost revenue even when the power goes out.

Making the digital ecosystem and environment enabling for digital businesses to develop, evolve and thrive will make the digital economy more accessible for small businesses and entrepreneurs. This will create an environment that enables investment in the sector to generate a healthy return, and with it, opportunities to grow the economy can truly be unlocked.

The Takealot Group, which owns takealot.com, Superbalist and MrD is an example of what such an ecosystem enables, supporting over 18,000 SMEs and 33,000 jobs after a decade in operation. Our commitment and ambition is to grow this ecosystem and to inspire many others to do the same. Our hope is that our policymakers and regulators will acknowledge the power of the digital economy to address the disturbing unemployment crisis and limited SME development momentum, and work together with business and other relevant parties to create an environment to catalyse these opportunities.