Making the most of the Fourth Industrial Revolution’s opportunities to propel economic growth in South Africa

February 1st, 2022
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By Dimakatso Matshoga, COO of SAtion

Whether South Africa is ready or not, the Fourth Industrial Revolution (4IR) is happening now. It is more vital than ever that South African businesses are able to take up the many opportunities provided by it, including digital transformation, if we want to escape the economic stagnation our country finds itself in.

This is especially important as South Africa faces huge economic growth and unemployment challenges. Unemployment, specifically amongst young people in our country, is at a record high. According to Stats SA’s latest figures 66.5% of people aged 15 to 24 years old are unemployed. The reality is that the global economy is going to increasingly offer the future generation employment opportunities in digital and tech-focussed roles, and we need to make sure current and future generations can grab these.

Let’s take the example of the Internet of Things (IoT) – physical devices that connect to the internet and can send/share data, including devices like smart watches, fleet tracking devices or temperature sensors at an airport. A 2021 report by the United Nations Conference on Trade and Development (UNCTAD), “Digital Economy Report” forecasts very significant growth related to IoT globally. The report estimates that by 2025 the total number of IoT connections will be in the region of 25.2 billion, up from 9.1 billion in 2018.

Crucially, when thinking about economic growth, this increase in the number of IoT connections is linked to a related boom in revenue of about R1.1 trillion by 2025. But of that revenue growth, only 1% is predicted to flow to the whole of Sub-Saharan Africa.

The report also speaks the vast quantity of data created by IoT and how this may link to cross border data flows. It highlights a 2021 study that predicts emerging economies (including South Africa) could benefit immensely from open cross-border data sharing linked to the increased use of IoT. In fact, estimates are that – under the right conditions – this could lead to a 2.6% increase in GDP and 1.3% increase in employment in the case of South Africa. Remembering that IoT is but one facet of the growth in the digital economy, the opportunities of digital transformation to our overall economic growth and the related jobs that come with it, comes into sharp relief.

So we know that the opportunity we all need to turn the tide against unemployment and economic stagnation is here. But it is vital that South Africa’s workforce is able to match the skills requirements aligned with this massive growth, or the opportunity will simply pass us by.

If we are to take advantage of these and other 4IR economy opportunities, we urgently require building, sharing and growing digital skills amongst the unemployed or underemployed youth in South Africa, ensuring that we build the right skills for employability. This should be an imperative for all South African businesses. Covid-19 has seen the rapid acceleration of the need for digital transformation in a number of sectors as consumers (whether individual or corporate) have increasingly moved to online platforms to purchase and do business. Any business that wants to remain competitive in this environment will increasingly need to draw from a labour force equipped with the right digital skills.

South African youth face numerous barriers to cultivating the right set of skills to take advantage of the possible employment opportunities that the digital economy does and could provide going forward. The reality of a lack of access to reliable internet connectivity and affordable data (including the cost of mobile data for example), hardware and electricity are all critical and practical factors at play. As is the availability of quality and affordable skills programmes that would help our youth take up these opportunities.

This is where the private sector in South Africa can help break down these barriers. There are numerous avenues that this kind of assistance can take, including donating unused, new or just recently out of date tech/equipment to schools or community-based tech labs. It includes offering funding or practical work experience opportunities for higher education and skills training that have a focus on digital and tech skills. These are but a few of the initiatives that can help South African youth join the labour market with skills that are actually in demand.

Through SAtion’s partnerships with government, global leaders like Microsoft and local innovators at Afrika Tikkun, we’re starting to see some hope. The Mzanzi Digital Learning platform provides free education from basic computer literacy through to Advanced IT skills and more for South Africa’s unemployed young people. But it will take a range of private sector businesses investing in similar projects and initiatives enabled by a progressive government, to close the digital divide in South Africa so we can get to a critical tipping point.

Businesses undertaking these kinds of initiatives should see this as a two-fold and long-term investment. Firstly, a labour force that can keep pace with business’ own demands for digitally skilled workers is essential. But secondly, we all need to work together to close the digital divide in South Africa. This will have a multitude of positive externalities for our country beyond economic growth and employment – namely, helping to create a more inclusive and equitable society. As reflected by Robert F. Smith of Vista Equity Partners at a 2021 World Economic Forum event, “there are enormous opportunities if we can close the divide, from education to employment. There’s ‘massive economic impact’ in uplifting communities, if we can take advantage.”

The Fourth Industrial Revolution is here, we must take every advantage of the opportunities we have to uplift South Africa for that future.

Dimakatso Matshoga is the COO of SAtion, a partnership between government and pioneering business enablers with the aim of rapidly and sustainably digitalising South Africa for inclusive economic growth.

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