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Dumped set-top box programme spotlights failure of ANC to grow industries

Marian Shinn is a Member of Parliament with the Democratic Alliance (DA), and the Shadow Minister of Telecommunications and Postal Services. See here Wikipedia profile.

The folly of the ANC’s developmental state policy hit the spotlight last week when it announced that it was abandoning its programme to buy set-top boxes (STBs or decoders) so poor households could watch TV on old sets once the country switches to digital broadcasting.

The decision a decade ago to use Broadcasting Digital Migration (BDM) as an opportunity for emerging entrepreneurs to enter the electronics manufacturing sector became the unintended stumbling block of the programme as it was a magnet for cronyism, corruption, policy flip flops in response to broadcasters’ turf wars and legal battles, inadequate planning and funding and bureaucratic inefficiencies. Any black-owned company now active in the sector made it under their own steam. Government’s policy didn’t help them at all.

It’s the primary reason why:

South Africa missed the international deadline for analogue signal switch-off on June 17 2015. The signal would not be switched off until 87,3% of the 5 million qualifying poor households received their government-gifted STBs;

TV broadcasters fought protracted battles to influence both government policy and the encryption standards of the STBs, and the STBs couldn’t be produced until the matter was settled;

Sentech had to seek government funding to maintain obsolete infrastructure to keep transmitting analogue TV signals while its R1 billion investment in digital signal transmission equipment – that was ready for the 2015 deadline – is no longer under warranty and generating little income. Sentech has also had to seek extra government funding of about R460 million over the past three years for the ‘dual illumination’ process of keeping both analogue and digital transmitters functional;

The much-delayed STB production process became a magnet for corruption. The tender process that ‘selected’ the companies to produce them has now been declared unlawful by the High Court, and set aside, and

The spectrum now being used for analogue broadcasting was not freed up three years ago to enable nation-wide mobile broadband access to meet the urgent demands for cheaper, ubiquitous internet access. The lost opportunity cost here is incalculable.

The ANC government’s plan to give black start-up companies a leg up into the electronics manufacturing sector was given legal impetus through the Set-Top Box Manufacturing Sector Development Strategy for South Africa, gazetted in 2012 by former Minister of Communications Dina Pule.

It used government’s plan to, initially, subsidise the procurement of 5.2-million STBs for poor households, to push the orders to black-owned businesses wanting an entrée to the electronics manufacturing sector.

The costs of this varied over time and the goalposts were moved to finally give away 5 million STBs to households with a total monthly income of not more than R3,200. This would cost about R6.2-billion.

As National Treasury was reluctant to handover all the money to a faltering programme managed by an entity with a reputation for corruption and ineptitude – the Universal Services Access Agency of South Africa (USAASA) – it released only R2,45 billion in 2015 for the first tranche of STBs.

A bizarre tender process was held in 2015 whereby all those who submitted bids for the STBs, antennae and aerials were declared winners. In August 2015, USAASA chose three of these companies to share the first order of 1.5-million STBs. Only CZ Electronics had its own production facility. The others – Bua Africa and Leratadima Marketing outsourced their orders to established manufacturers Microtronix and Grand Tellumat Manufacturing respectively.

So much for using the STB manufacturing development strategy to facilitate new entrants to the sector.

USAASA halted the production process in June 2016. There was a legal challenge to the revised BDM policy on the encryption facility in the STBs that headed to court and the fact that corruption was suspected in the tender process.

In 2017, USAASA approached the Gauteng Division of the High Court to determine whether the tender process was unlawful. On 31 May 2018, Justice Tuchten issued an order declaring that the tender process was unlawful and that the panel of service providers who won bids be set aside.

In June 2018 Minister of Communications Nomvula Mokonyane appointed a 12-member panel to review and possibly revise the BDM programme.

This was two years after the DA first called for a total revision of the BDM policy, and a parliamentary hearing into the issue. This was ignored by the various Ministers of Communications and the chairpersons of the Parliamentary portfolio committees of Communications and Telecommunications and Postal Services chairpersons, and attempts each parliamentary term for two years to have it placed on the committees’ agenda has met with prevarication.

So the ANC’s developmental state policy is belatedly stepping away from supporting black entrepreneurs in the electronic manufacturing sector due to massive corruption and implementation failures. DM

Marian Shinn MP is DA Shadow Minister of Telecommunications and Postal Services


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