There are still many challenges to inclusive economic growth in South Africa. What is already clear, is that the Covid-19 crisis – and the partnerships created to respond to it – provides a real opportunity to rethink the country’s future.

The information and communication technology (ICT) sector is one of the business segments highlighted for an urgent, unambiguous and compelling new narrative focused on inclusive growth and investment. It is common cause that the sector requires national initiatives and policy interventions to create greater certainty and enable more inclusive growth, specifically in the areas of full spectrum utilisation, e-learning, digital health platforms and the acceleration of e-commerce.

The impact of the Covid-19 pandemic on the global telecommunications sector has been less severe than on other consumer-focused sectors of the economy. The central role connectivity plays in maintaining economic and social activity results in the sector being fairly “crisis-resilient”.

Nonetheless, equity valuations of telecommunications players have been significantly affected. In South Africa, the market impact was initially severe, compounding a series of key market developments, including the December 2019 Competition Commission ruling on data prices, the resumption of load shedding and corporate restructurings. 

Sourcing relevant skills and capital and investing in projects to create growth and jobs is already well advanced within this sector – ICT was earmarked at the Jobs Summit as an “activator of employment”. Connectivity, including spectrum and broadband, was defined as one of the “critical enablers”.

Mobile telecommunications can generate economic value and social benefit. The South African telecommunications sector contributes significantly to economic output at some 4% of GDP (R194-billion).

A strong telecommunications sector is critical for South Africa as it provides the base for our digital interactions. The sector would benefit from policy change that enables the Independent Communications Authority of South Africa (Icasa), the completion of the spectrum auction, considering the merits of creating and licensing of the Wireless Open Access Network (WOAN) and a re-energising of digital migration to free up spectrum.

Access to the internet powers businesses and consumption and promotes many social outcomes, including economic and financial inclusion, education and health. Opening additional frequencies – which have already been discussed, planned, approved and are ready for implementation – will allow mobile operators to connect more people and offer faster speeds.

Business urges the national regulators to release sufficient, affordable spectrum as urgently as possible. Decisive leadership, together with appropriate capacity and expertise, is needed to implement these immediate actions. I refer here not only to direction and guidance from the government.

Economic growth and development through connectivity will enable new growth industries within and outside of traditional telecommunications companies, while facilitating growing e-commerce and realising social development goals. 

This will result in greater financial inclusion, expand access to education platforms through e-learning and improve access to healthcare through tele-health, which is in its infancy in South Africa. One of the major impacts of Covid-19 has been on supply and demand. 

Demand for data has increased significantly during the crisis, while demand for voice services has declined through OTT substitution. As consumer and business revenues come under pressure, demand is expected to be subdued in the medium term. 

But the wide-scale adoption of “remote-first” processes will drive digital substitution of activities, which were previously conducted in-person. Increased connectivity demand has strained existing network infrastructure, even though temporary spectrum was released to alleviate pressure on networks.

The telecommunications industry faces structural constraints. In terms of infrastructure and spectrum deployment, the lack of a final Rapid Deployment Policy (RDP) creates complexity and high costs for operators to roll out a network.

Over the short term, we believe it is important to ensure the continuity of connectivity and to minimise congestion. Over the medium term, there is an imperative to reform the regulatory environment to ensure the longer-term health of the sector. Within five years, there is every possibility that South Africa can enable this sector’s full growth potential through rapid implementation.

The under-allocation of spectrum increases cost and possible network congestion. The lack of High Demand Spectrum (HDS) and an RDP contributes to high data prices. This prevents SMMEs from adopting and benefiting from information and communication technologies. 

Policy uncertainty is also evident. Frequent changes in leadership at the Department of Communications and Digital Technologies (DCDT) stalled policy implementation and created uncertainty in the industry.

There is a trust deficit between the industry and the regulator, which hampers an effective working relationship. South Africa’s institutional capacity is largely intact, but Icasa should enhance its technical and private sector telecommunications experience to improve decision-making and build trust through industry representation. 

The DCDT must focus on strengthening the managerial and technical skills required to execute policy implementation. The reliable supply of electricity remains a major constraint within the telecommunications sector.

Similarly, theft and vandalism have an impact on all areas of South African business. Business for South Africa’s (B4SA) report highlights the priorities to address sectorial constraints and take advantage of the opportunities that exist.

These include: the urgent enactment of the RDP, which is needed to facilitate faster and cheaper roll out of network; enabling 5G; and investment in infrastructure. In terms of spectrum allocation, it is vital to finalise digital migration, which is essential to advance network coverage and quality. 

Over the short term, we believe it is important to ensure the continuity of connectivity and to minimise congestion. Over the medium term, there is an imperative to reform the regulatory environment to ensure the longer-term health of the sector. Within five years, there is every possibility that South Africa can enable this sector’s full growth potential through rapid implementation.

This will result in the addition of 65,000 jobs, add R20-billion in GDP, and R6-billion in additional taxation annually. The economic potential the industry stands to unlock is material – enabling new industries, providing access to the digital economy and creating a platform for digital basic services in South Africa. B4SA firmly believes that there is an opportunity for national innovation and renewal in the ICT sector. 

But we must work together to address the fundamental issues head-on if we are to achieve inclusive growth. BM/DM