South Africa, which has been struggling to enter the Fourth Industrial Revolution (4IR) space and match its counterparts, finally has an overall plan to kickstart the digital economy for the next five years.


According to the final draft of the ICT and Digital Economy Masterplan for South Africa, which was drawn up by Genesis Analytics and Knowledge Executive who have been working closely with the government, the digital economy offers the country the chance of collective prosperity. But it does warn that a digital-driven development path comes with enormous risks, including increasing the country’s huge inequality gap.

“We can learn from our recent past about what is required for such a process of rapid national transformation. Complimentary to the ongoing process of black economic empowerment, digital empowerment must be South Africa’s next national priority,” the document reads.

It says at the core of digital economy is physical technologies such as semi-conductors and processors and the digital devices they enable, the software and algorithms which run on these devices, and the telecom, data and cloud infrastructure and services and the energy infrastructure which allows them to connect. They create digital solutions for numerous areas including agriculture, health, banking and e-government services.

Up until now, the South African government and companies have largely embraced 4IR in silos. And while some startups have made inroads in disrupting business as we know it, many of them have failed. This is often because of a poor access to financing, support and knowledge on how to navigate the space. Another impediment is a lack of comprehensive knowledge on the country’s digital economy, so it is impossible to correctly quantify its nature and size.

According to the document, anecdotal evidence suggests that South Africa’s digital economy is growing, and informal sources quantify that its contribution to the GDP is anywhere between 2% and 19%. But a look at global statistics shows just how big its impact is. By 2016, the digital economy contributed around 15% to the world’s GDP, which equals $11.5-trillion. It is estimated to grow to 24% by 2025.

“What is clear without needing rigorous digital economy estimates is that there are areas of rapid digital economy development in parts of the economy, but that this exists alongside areas of lagging digital economy development,” the report says.

The plan has identified four “big bets” and five enablers to create jobs, transform the economy and ensure inclusive growth. The big bets are physical technology production, transformative tech applications, digital
platforms and digitally traded services. The critical enablers are digital inclusion, skills for work, responsive governance, innovation and competitiveness, and digitising the state.

“For South Africa to have a successful digital economy industrial policy, the country will have to place some big bets. However, it may be risky to do this at the level of specific firms, or even sectors. Rather, we have identified here four unfolding processes in the digital economy which offer concrete opportunities for generating inclusive growth, jobs and transformation across multiple sectors,” the plan reads.

By: Amy Musgrave