Want to see recovery in SA? Growth? Innovative businesses hiring people? Responsive government? Then the country needs to get serious about digital transformation.
The Small Business Institute (SBI) and researchers at research & development company SBP could reach no conclusion other than the idea that digitalisation — and all that is required to enable it — is the country’s best hope for a healthy economic future.
The fourth industrial revolution (4IR) is not still coming — it is here, said small business development minister Khumbudzo Ntshavheni in a debate after the recent state of the nation address. She was not wrong. But is SA opening its doors to greet it?
The government is stuck somewhere in the early stages of the third industrial revolution — you remember, the one where it was revolutionary to scan and store documents as PDFs, centralising information and automating production or services?
The National Planning Commission’s (NPC’s) paper on digital readiness uses the following terms to describe the government’s efforts thus far: “stasis”, “incapacitated”, “compromised”, “paralysed” and “ideological rigidity”.
Budget finance minister Tito Mboweni acknowledged in the budget in February how vital digital infrastructure is to support economic growth and yet conceded that the government’s most important strategic projects are “still in the prefeasibility and feasibility stages of development”. It might be that time spent on feasibility studies, strategy development, master plan development, policy drafting, and (occasional) consultation might be better spent on the implementation of activities that would suggest a sense of urgency in digital transformation.
Imagine the digital empowerment South Africans would feel if using data analytics, a characteristic of 4IR, could mean the advent of the citizen-centric, transparent, accessible modern government we have all been yearning for. Such a government — at all tiers — would deliver targeted services, save money, remove unnecessary red tape and the fundamental indignity of standing in endless queues (to get a document quite literally stamped), and pave the way to reduce the cost of small firms doing business, becoming sustainable and hiring more people.
With digitalisation the government can lower its own transaction costs. The IMF estimates that collectively, by introducing digital systems in the public service, emerging economies could save between $220bn and $300bn annually, or 0.9%-1.1% of GDP. Accenture has suggested that if SA embraces and enables a digital economy it could boost total GDP in the coming years by 3%.
Digital analysis would also provide far more effective poverty reduction strategies, and since data analytics correlate with improved productivity, dynamic and innovative employment opportunities would grow exponentially.
Another important aspect of digitalisation is that it is geographically agnostic and does not just favour urban centres — our decaying rural and small towns would also benefit.
But first we must:
- Prioritise long-term investment in digital and critical thinking skills development for students, the employed requiring retraining, and the teachers who teach them. Flexibility will be important.
- Build the requisite and affordable digital infrastructure to achieve economic advancement and inclusion. And let the private sector help. Enable and incentivise it to do so. An increased broadband investment of R65bn in the next 10 years, for example, could create more than 400,000 jobs and add R130bn to SA’s GDP.
- Seek public-private partnerships in respect of building “govtech” solutions to e-governance, innovative institutions and execution of digitalisation.
- Rapidly accelerate the procedures for green lighting large-scale renewable power projects. The many services that digital transformation is dependent upon, especially base stations, data warehouses and cloud providers, not to mention the ability to charge a cellphone, cannot operate without a stable, affordable power supply. Every hour of load-shedding, and every tariff increase, diminishes SA’s prospects for success and increases the costs of doing business. In the recently published World Bank SA Enterprise Survey 2020 businesses overwhelmingly cited electricity as their primary business environment constraint.
- Commit to responsive, citizen-first governance and progress rapidly to a digitalised government. Ensure, especially, that procurement procedures are online and transparent to enhance efficiency and minimise corruption.
- And the government must constrain the regulatory environment to fewer and better laws with clear policy objectives and targets, paying heed, as the NPC suggests, to a “regime conducive to small business needs and abilities”. Regulation should not simply require compliance, but promote in the different life stages of small firms: innovation and competitiveness, that is, entrepreneurship; job creation; digital platforms for e-commerce proliferation and mobile payment options; digital financial services; the speedy adoption of emerging technologies; harmonising and easing cross-border trade; and holding ourselves accountable.
To quote again from the NPC’s December Review, “Ensure that the views and concerns of small businesses are more effectively articulated in decision and policymaking structures. Policymaking and regulatory design needs to be more responsive to the needs of small business.”
And finally, our funding priorities need to match our policy aspirations. Diverting what little revenue we have — as we have done in a public health emergency, a supplemental and February’s budget — means we cannot adequately fund the initiatives and programmes to roll out the 4IR red carpet.
• Dludlu, a former Sowetan editor, is executive for strategy and public affairs at the Small Business Institute.
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