Earlier in July, the inaugural Fourth Industrial Revolution (4IR) Digital Economy Summit was held with great fanfare and aplomb. President Cyril Ramaphosa – referencing a tenuous study by Accenture – heralded 4IR as an opportunity to grab R5-trillion in value (roughly the size of South Africa’s current GDP) over the next decade. Businesses can “unlock economic potential and create a Silicon Valley” in South Africa, he claimed. To help realise this, the president has appointed a 30-member commission of academics and business leaders which will advise the government on 4IR strategy and policies.
The aspiration to become globally competitive in the 4IR arena and create economic value and jobs for South Africa is laudable. But what will set this new initiative apart from countless previous growth initiatives and multipoint plans that looked great on paper but ultimately never amounted to anything? And how can we ensure that South Africa is a beneficiary of 4IR instead of a victim, as many doomsday warnings have cautioned?
Of late, 4IR has become a banality and a buzzword. So frequently and loosely is the term thrown around, it is arguable that most proponents do not even understand what it means. It is therefore instructive to frame and define 4IR using the first three industrial revolutions as context.
- The First Industrial Revolution used water and steam power to mechanise production.
- The Second Industrial Revolution used electricity to enable mass production.
- The Third Industrial Revolution used electronics, IT and the internet to digitise production, distribution and services.
Rather than representing the advent of a single new technology like the first three revolutions, 4IR is characterised by the rapid evolution of multiple digital technologies and their integration with each other, as well as with the physical and biological worlds.
Common examples of 4IR technologies include artificial intelligence (AI) whereby machines are able to identify patterns, solve problems and make decisions in a manner similar to humans, the internet of things (IoT) where objects such as your fridge or car connect to the internet and communicate with each other, and blockchains – secure, decentralised, digital ledgers that are widely used as the backbone for cryptocurrencies such as Bitcoin.
These are just a few examples of a growing range of 4IR technologies. Such technologies have the potential to create significant benefits: they can raise income levels, improve the quality of life and decrease the cost of trade. However, there are also grave concerns: most notably that automation and AI threaten to disrupt the labour market, as machines become capable of doing people’s jobs. Indeed, if left unmanaged, 4IR could dramatically increase inequality, whereby the riches flow to the owners of capital and technology while the poor become even poorer as they lose their jobs to machines. If that happens, there is a real risk of increased social unrest and societal implosion.
So how can South Africa harness 4IR in a manner that maximises the benefits whilst mitigating the risks? The key will be to focus on two things: infrastructure, and skills development.
First, infrastructure: in order to master 4IR, South Africa must first get a good grip on the second and third industrial revolutions. The beleaguered power utility Eskom struggles to supply electricity and pay its debts. Earlier in 2019 South Africa saw the biggest GDP contraction in a decade – primarily as a result of load shedding, underscoring how critical Eskom is to business continuity and productivity. Improving Eskom’s efficiency, stabilising its finances and deregulating the energy sector will be necessary for ensuring energy security.
The 4IR relies critically not only on a stable electricity supply, but also on universal internet connectivity. However, only 15% of households have fixed broadband and around half of the population have smartphones or mobile data access, according to reports by ICASA and the ITU. It is widely expected that advanced IoT applications will rely on 5G mobile telecoms infrastructure.
However, South Africa has not yet even migrated from analogue to digital terrestrial broadcasting – a move necessary to free up valuable spectrum for rural mobile data connectivity, provide internet access to those who don’t yet have it and accelerate the path to 5G. Analogue to digital migration should have been completed by 2015 but a combination of indecision, incompetence and possibly corruption have led to successive delays.
Without a stable energy supply and high-speed, low-cost, universal broadband coverage, effectively capitalising on 4IR will be challenging, if not impossible.
The second prerequisite to reaping the benefits of 4IR is skills development. Professor Klaus Schwab, who coined the term 4IR, believes that talent, more than capital, will represent the critical factor of production in the future. This means that architecting a labour force with the skills required to create and manage 4IR technologies – such as coding, data science and analytics – will be critical.
How does South Africa measure up to this challenge? These skills are largely predicated on maths and science – disciplines in which South Africa ranks among the worst in the world, as evidenced by a global assessment of school students conducted by the Organisation for Economic Co-operation and Development (OECD) in 2015. Proponents of 4IR advocate for coding to be added to the national curriculum. This is all well and good, but pointless if students cannot even do basic sums.
It is therefore imperative to fix the basic education system – ensuring that teachers are qualified and schools possess the tools and infrastructure to support a significant improvement in the standard of maths and science.
It is admirable that the President has put 4IR firmly on the agenda. But it is foolish to think that South Africa can succeed in benefiting without first getting the basics right in both infrastructure and education. If it does not, the President’s dreams of creating a Silicon Valley will remain just that – dreams. DM