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October 29, 2018

Stimulating the local ICT industry

By Xolile Ndlangana, Marketing Director Boxfusion

At the end of September, as part of his stimulus package, President Ramaphosa announced intentions to improve allocation of the high-demand radio spectrum. The aim is to reduce data costs, and thus reduce business costs, increase the provision of broadband, and attract investments.

This shift in the local economic landscape, and the way the public sector approaches the ICT industry, presents an interesting opportunity for those of us operating in this particular area.

In recent years, there’s been a reprioritisation by government to improve and increase the digitisation of the public sector. Part of this includes extending access to Wi-Fi in public spaces (as we’ve seen in Stellenbosch, Pretoria and Cape Town) and to consider more closely the role the ICT sector can play in economic development.

While there are more pressing needs in South Africa, such as housing and education, that doesn’t mean investing in ICT infrastructure should be neglected. Should we fail to prioritise this sector, we could once again find ourselves on the wrong side of the digital divide, as developed countries continue to forge ahead with infusing technological innovation into the everyday life of the citizen.

A study conducted by the World Bank indicates that widespread access to broadband within developing countries has the potential to boost GDP by 1.38% for every 10% increase in broadband penetration. By lowering the barrier to entry (i.e. costs) of broadband, small businesses – the primary source of employment in this country – have greater opportunity to innovate and improve their services, increase their profits and ultimately uplift and empower more job-seekers.

Research dating as far back as 2007 indicates that as an investment opportunity, The ICT sector has consistently proven to be more resilient than the more traditional sectors in emerging economies. This is more pertinent than ever, as technology increasingly penetrates our day-to-day lives.

While government has taken the first step in highlighting this sector as a worthwhile investment opportunity, such initiatives will have to be executed in partnership with the private sector, where a large majority of the country’s investment capital lies.

Of course, part of increased investment in ICT must include investing in local software companies to ensure that this growth is not only effective, but has a cumulative effect when it comes to stimulating the local economy.