This article was first published in Business Day
We’ve always been clear that our recovery from last year’s Covid-19 inspired economic downturn should be two-tiered. First, recovering the ground that we lost due to the pandemic and second, taking advantage of the crisis to recast the economy to set it on a more inclusive growth path.
In a recent weekly letter, President Cyril Ramaphosa spoke of the importance of the digital economy, the growth of which has been accelerated by the coronavirus pandemic. Referring to SA’s number one ranking for global business services in a survey of 600 executives from Australia, Canada, France, Germany, Italy, Spain, the UK and US, he highlighted our “sophisticated” digital infrastructure as the country’s strength.
Ramaphosa said the growth of the business services sector over the past few years and marketing the country as a destination for investment was possible only through partnership between the sector and the state. The sector has added about 40,000 jobs since 2018 with young people making up 82% of the new jobs and women 65%.
We still face the challenges of deploying fixed infrastructure in rural areas while suffering a shortage of ICT resources. The country’s shift into 5G mobile communications technologies is stalling because of the continued delays in our spectrum auction, with the process now before the courts.
The introduction of 5G technology will offer the country more technological innovation in the fields of artificial intelligence and the “internet of things”. It will accelerate the fourth industrial revolution and facilitate digital inclusion. The World Economic Forum has said “5G will change the world even more profoundly than 3G and 4G; it will be as revolutionary as electricity or the automobile, benefiting entire economies and entire societies”.
Resolving the spectrum auction once and for all is the central element needed to fulfil the promise of the digital economy and for SA to remain competitive. It’s crucial to our overall reform agenda but I can’t see it happening this year, and there’s a strong risk that it won’t happen within the next three years. That would set us back significantly. While the state may lay the blame of the recent delays on the court actions of mobile operators, the decades-long delays point more to an issue with policymaking.
The issue highlights the problem Operation Vulindlela will have in dealing with independent institutions such as Icasa or the National Energy Regulator of SA, which themselves need serious reform but cannot be dictated to.
Spectrum is one of the top reforms the country needs and we hope that enforcement of the ministerial performance agreements will provide urgency in implementing them. They are important and form a component of how Operation Vulindlela is able to exert some pressure on individual departments.
While we join the president in applauding the work done in boosting the business services sector, we cannot rest on our laurels. The digital economy offers other avenues of growth — delivering on sectoral reforms is essential to unlocking them.