Speech by the Deputy Minister of the Department of Telecommunications and Postal Services, Honourable Prof. Hlengiwe Mkhize during the occasion of GSMA Mobile 360 Africa at the African Pride Hotel, Crystal Towers, Cape Town
Topic: “The Power to Connect: Providing Access for All”
Introduction
The South African mobile sector was emerged just before 1994, with only two operators, MTN and Vodacom. It was through government’s regulatory and policy measures, including spectrum allocation and the raising of call termination rates. Adequate support was given to the incubation and massive growth of these operators. A few years subsequent to this, the mobile operations authority further issued two licenses to two additional mobile operators. Mobile phone penetration in South Africa, including rural areas is at 200% but unfortunately in more than 50% of the cases of those who have access to smart phones still require critical ICT skills to appreciate its full benefits. This industry has indeed played a major role towards an establishment of an information society.
Employment and unemployment figures in South Africa
In terms of the given theme - “The Power to Connect: Providing Access for All”, we need to be upfront, in the entire world, particularly South Africa , the white elephant in the room is poverty and inequality, as manifested through high levels of unemployment. According to Statistics South Africa (STATSSA), the Labour Force Participation Rate in South Africa decreased to 58.10 percent in the second quarter of 2015 from 58.60 percent in the first quarter of 2015. Labour Force Participation Rate in South Africa averaged 56.39 percent from 2001 until 2015, reaching an all-time high of 60.80 percent in the first quarter of 2001 and a record low of 53.60 percent in the fourth quarter of 2010.
Statistics South Africa’s Quarterly Labour Force Survey report for quarter two of 2015 found out that in South Africa, the working-age population was 36,0 million of which 15,7 million is employed, 5,2 million unemployed and 15,1 million not economically active. Thus resulting in an unemployment rate of 25,0%, labour absorption rate of 43,5% and labour force participation rate of 58,1%.
The ICT Sector is one of the new sector with a high potential of job creation. With new technologies and connection methods such as broadband connectivity, there are endless possibilities of employment creation including entrepreneurship.
A media report released earlier this month by Statistics South Africa reported that at the end of June 2013, the post and telecommunications industry had a total number of 107 000 persons employed. ‘Telecommunications’ employed the largest number of persons, 70 229 or 66%.
Compared to the same survey conducted in 2010, employment in the post and telecommunications industry increased by 6,0% per annum. In 2010 the total number of employees stood 89 859. Casual employees recorded the highest increase of 74,4% or 8 766 per annum over the number, 1 653, reported in the corresponding survey of 2010. Permanent employees, with a total number of 82 693 recorded a decrease of 0,6% per annum over the number 84 248 reported in the corresponding survey of 2010. The proportion of females out of the total persons employed was 39% compared to 41% reported in the corresponding survey of 2010.
Impact of mobile data on GDP growth
The landing of four international submarine fibre-optic cables in South Africa between 2009 and 2012 has brought down the cost of international bandwidth dramatically. Additional cables with terabit capacity have come on stream during the last few years. Previously, Telkom monopolised access to the only major cable serving the country, and so was able to demand very high access prices. The mobile connection inland depends on these cables in order for us to have a broad link with the international community.
Also, new converged licensing regime has created hundreds of companies licensed to offer internet services. So far, there has been consolidation in the sector which is expected to continue.
The increase in 3G connections, supported by the proliferation of data-enabled devices that allow mobile internet connectivity, has led to a massive growth in the use of mobile data. To date, investigation of the economic impact of this transformation has been limited by data unavailability.
The mobile telecom sector continues to offer unprecedented opportunities for economic growth in both developing and developed markets, and mobile communication services have become an essential part of how economies work and function.
There is no better way of expressing the value of the mobile telecommunications sector than that which is in one of your Report, which reminds us that “the incremental benefits of next generation mobile telephony services such as 3G technology and mobile data services on economic growth have not been fully explored yet”.
The impact of mobile telecommunications penetration on developing rural economy
Eradication of poverty
In a developing country like South Africa, ICT and broadband connectivity should be part of the key drivers to enhance socio-economic growth. We have seen developed countries such as Europe talking about the importance of digital social innovation which is the use of digital technology to enable new or more effective solutions to social problems or needs in order to reduce inequality. What is mainly emphasised are the many digital innovations that are or have been developed to connect, mobilise and empower people, communities, organisations and sectors to help them shape their environments, solve problems and improve lives. Digital tools are providing different ways for organisations and institutions to deliver services and create solutions to both new and age-old problems faced by the public, private and non-governmental sectors.
Over the period 2001 to 2007, per capita cellular subscriptions increased by 364% in our country. As early as 2005 a study by Vosloo and Van Belle reported that most South African SMEs use mobile technologies and are using these technologies for information sharing.
The results of a study conducted by Esselaar et al. (2007) on SMEs in 14 African countries including South Africa on ICT usage indicates that mobile phones have overtaken computers as tools in supporting the running of SMEs, given their prevalence and accessibility. The focus on mobile technologies by SMEs is both an advantage and a disadvantage. It is an advantage because it provides the SMEs with a low cost base and the ability to communicate with suppliers and customers easily. The disadvantages that mobile technology poses to SMEs are its limited functionality and ability to develop as an SME develops, as well as the associated high usage cost.
Mobile telecommunications benefits for the unbanked society
According to the World Bank there has been a significant improvement in terms of access to the Financial Sector. In South Africa, though , high levels of unemployment and the strict criteria for credit access to the finance and insistence on collaterals , inevitably excludes the poor. FinScope South Africa 2014 indicate that the banked population remained static at 75% between 2013 and 2014; 27.4 million of the adult population in South Africa are banked; Banking is largely driven by transactional products/services; and 30% of adults receive a form of government grant – 93% of them are banked because of the SASSA MasterCard. This indicates that there is a huge untapped market for mobile financial services , especially at the time when we are talking radical economic transformation.
South Africa has been outpaced by other African countries such as Rwanda, Kenya and Tanzania. In these African countries, there has been a trend of adopting mobile banking and financial services with a diversity of products for the poor rural communities quicker.
Some of the key lessons we can take from other African countries include:
- Digital Disruption still “controlled” by Banks not Networks
- Financial Inclusion products such as SME loans are still expensive /unaffordable from Banks and Micro lenders
- Risk Assessment based on collateral still main yardstick within Banks
- Lending and savings based on collectives still largely outside Formal Banking (e.g. stokvels)
- Insurance based on individuals and not groups still expensive
- Insurance using Brokers, Expensive Infrastructure and Marketing Campaigns too expensive
- Payment Systems still controlled by Banks with transaction fee and high interest business model
The importance of enabling mobile internet adoption in Sub Saharan Africa
In the ITU report “Measuring the Information Society”, it was found that for consumers in developed nations, mobile Internet generally serves as a compliment to, rather than a substitute for, fixed-broadband. In contrast, in developing nations, mobile Internet is often the only means available for accessing the Internet, especially in remote rural areas.
Mobile Internet has transformed the world’s economic and social landscape and the mobile Internet has grown to be a significant economic sector in its own right, generating significant revenues across the value chain including the network, devices, and applications. However, this severely understates the impact of the mobile Internet, not just on the broader economy, but on users around the world. The mobile Internet has been adopted across almost all sectors, including government, healthcare, and entertainment, with a variety of innovations that take advantage of both full mobility and the features of smart devices.
As a result, the mobile Internet has become an integral part of users’ lives, not just enabling us to communicate with our friends and family, but track our health, interact with our government, entertain ourselves, and even help earning a living. Mobile Internet access, provides a gateway into an online experience that is expanding by the day. Users across the world have been able to join the global community as never before—from global financial centres to remote villages, where in some countries we see most of vendors now selling their goods via e-commerce platforms; from successive waves of youth for whom social media is common currency to older population segments who have new ways to stay connected.
Just as mobile Internet adoption has leap-frogged that of fixed in many countries, so have the services it enables. While such leap-frogging is typically seen in developing countries, such as in the case of M-Pesa providing payment services for those without previous access to the formal financial system in markets such as Kenya, there is also some element of this taking place in developed countries as well.
There’s no shortage of examples that illustrate in vivid detail the mobile Internet’s impact for those fortunate enough to be members of the online population. As mobile network coverage has expanded, the number of mobile subscribers has exploded. According to a 2014 report by GSMA called “The Mobile Economy”, from 2003 to 2013 the number of unique mobile subscribers grew from just over 1 billion globally—equivalent to just under one in six people—to 3.4 billion—equivalent to a unique subscriber penetration rate of 47 percent.
The internet of things
According to a study conducted by Cisco Visual Networking Index in 2015, South Africa is forecast to have 27 million internet users by 2019, an increase from 15 million which was the total number of users in 2014. This talks directly to the growing need to be connected as well as the increased use of online services.
Mobile Internet services offer new functionality. It is not just that we can access the same services outside of the home or office, but the services themselves are different based on the features of the smart devices and how they interact with the Internet. The smart device can combine video from the camera with crowd knowledge about where we are or where we are going; it can be woken with a movement to analyse our speed and positioning; and, as we look forward to the Internet of things, the smart devices themselves make up an array of billions of advanced sensors that can provide data about our surroundings.
With computer and Internet penetration in most countries still very low, the mobile phone is increasingly becoming key entry point for Internet adoption on the continent. This is one of the main findings of the 2011/2012 Ict Access And Usage Household And Individual Survey which reports that the emergence of Internet enabled mobile phones and lower bandwidth adaptations of applications, particularly social media, is driving the rapid diffusion of mobile internet.
Benefits associated with mobile internet access
Our people in this era travel more and longer distances than ever, people’s work situations are more changeable than they use to be and we seem to be on our way all the times. People are on the move both at work and home. At most workplace today, people face situations in which they must be mobile in carrying out their ordinary tasks. This increased mobility among people in our information society increases the need of being able to access information independent of the location. This is evident that one way of accessing necessary information when being mobile is to use Mobile internet services.
Mobile Internet requires less ICT skills, less financial resources and does not rely on electricity at home compared to computer or laptop and generally fixed-Internet access. However, Internet access is uneven across the continent. While the majority of countries under investigation demonstrate increased mobile Internet up-take, in Rwanda, Tanzania and Ethiopia Internet usage remains negligible.
The benefits of using mobile internet as it is presented today are not obvious to the general users. Hence, it is not easy for a user to make the connection between any need felt and what mobile internet services can offer. The benefits of the mobile internet are very important to emphasise. All people face daily challenges that could be resolved by the adoption of mobile internet. All role players (government and Private sector) must help our citizens to understand the benefit of mobile internet. Needs in communication and socialisation to the users at large it’s what is required to increase adoption of mobile internet.
The mobile Internet has created new opportunities for entrepreneurs. Firstly, the opportunity to create income, and even a fortune, is critical in this age, and the mobile Internet extends this opportunity to millions around the world who may not have formerly had access to the ingredients to innovate, or the marketplace to sell the outcome. Secondly, many innovations typically address local opportunities and gaps with local solutions, and indeed a number of the services highlighted in the following sections came about through individuals or small groups seeking to improve the lives of those closest to them.
Costs associated with internet usage
In increasing the adoption, we also need to consider the costs associated with the services. Costs is a very important factor that cannot be neglected to increase mobile internet usage. It is therefore important that the cost to internet access is re-looked at by countries with the objective not to deter usage of the internet. Various countries have already initiated different interventions that will see internet usage costs decreasing. We therefore commend such interventions and encourages others to follow suite.
Barriers to internet access and adoption
Identifying the barriers to Internet adoption is a critical step to formulating effective solutions to advance mobile internet adoption. One of the key barriers from the supply side, is the availability of infrastructure to provide coverage, particularly in rural areas which are often deemed uneconomic by the service providers. Policies which enable cost effective roll-out of infrastructure such as the release of the digital dividend spectrum and rights of way to expedite Infrastructure roll-out, sharing and coordination are crucial.
Mobile telecommunications ownership and industry diversification in South Africa
In South Africa, the past 20 years or so has seen the ownership of telecommunications service entities transforming into a major industry sector that offers considerable investment opportunities to private investors both domestically and internationally. According to a study conducted by BMI-T the cumulative Capital Expenditure since 1993 has been R132,4 billion in mobile and R101.8 billion in fixed networks.
Domestic investment has been strong with Telkom, Neotel, Vodacom, MTN, and Cell C investing billions of Rands in infrastructure. Other organisations such as Dark Fibre Africa,
Metrofibre Networx, and Dimension Data have also made notable investments. Some municipalities have invested in fibre and microwave telecommunications including eThekwini, City of Cape Town, City of Tshwane, City of Johannesburg, Ekurhuleni, Nelson Mandela Bay, Mangaung, and uMhlatuze.
It has been quite some time since we expressed our interest as government that, investment in the ICT sector is a fundamental policy goal, alongside transformation, diversity, universal access, and Black Economic Empowerment. What we termed radical economic transformation should be measured through diversified and broadened participation at different levels of economies of scale within the whole value chain of mobile telecommunications. The same spirit should continue to prevail as we collectively support new entrants to the market, striving to increase competition and decrease costs.
Transformation in the ICT sector
Transformation of the ICT sector underpinned by an appropriate regulatory regime and empowerment of South African citizens through skills training also remains pivotal to the policy making discourse as the country needs to develop the skills base that is relevant to the changing technological and developmental environment.
The Global Competitiveness Report 2012-2013 cites an inadequately educated labour force as one of the greatest obstacles to doing business in South Africa. This observation is shared by the National Development Plan which recommends that Government should “outline interventions to promote ICT diffusion and adoption such as e-literacy programmes to stimulate demand, ICT skills development and institutional capacity building.”
There is an urgent need for e-skills to be embedded in all spheres of learning (primary, secondary and tertiary levels). According to the 2012 World Economic Forum (WEF) Networked Readiness Report, despite having one of the most solid political and regulatory environments (20th) and better framework conditions for entrepreneurship and innovation (53rd) in the (Sub-Saharan African) region, South Africa is at 70th place. The country is not yet leveraging the potential benefits associated with ICT. Important shortcomings in terms of basic skills availability (97th) in large segments of the population and the high costs (112th) of accessing the insufficiently developed ICT infrastructure (98th) result in poor rates of ICT usage (78th) despite efforts on the part of the business community to use ICT and integrate it in a broader, firm-based innovation system (53rd). As result, the economic impacts accruing from ICT are patchy (49th) and the social impacts are disappointing (113th).
The department has in the previous year launched the iKamva National e-Skills Institute (iNeSI). INeSI is a result of the realignment of three institutions namely: National Electronic Media Institute of South Africa (NEMISA), e-Skills Institute and Institute of Satellite Software Applications (ISSA). It is aimed at the development of local e-skills that are required by the sector and the user skills necessary for social and economic inclusion to secure and create jobs.
iNeSI brings together government, business, schools, Further Education and Training Colleges (FETs), universities, civil society and global development partners to advance the development of local ICT skills that will make South Africa globally competitive, facilitate economic and social inclusion and contribute to economic growth.
The Department is also working with Women in ICT Forum to promote women inclusion as part of women empowerment. The ICT Industry is continuously encouraged to take pro-active steps to promote women empowerment including skills development; leadership within companies; ownership and control, and other aspects of empowerment.
There has been an acknowledgement that the main issue hindering women participation in the economy has always been access, access to financing and access to the markets. Government has therefore a deliberate move by government to support small businesses and cooperatives which is more reason why women should be encouraged to participate in these business ventures. Women are therefore continuously encouraged to voluntarily participate in business ventures such as cooperatives and small businesses whereby they will give each other support.
Government has in the past introduced the Broad Economic Empowerment legislation to address inequality, but later realised that it only benefitted few individuals especially men. The legislation has since been amended to become Broad-Based Black Economic Empowerment in order for it to cater for the broader society. The legislation gives preference to women in business to ensure their inclusion in the mainstream economy and full participation thereof.
Under the new broad-based black economic empowerment (or generic) codes, skills development, equity ownership and enterprise development have been made priority sectors. As a result, companies that turnover more than R50 million a year need to achieve at least 40% of the points available under each of these categories, or they will fall under the empowerment level.
The department has earlier this year conducted a workshop on the empowerment of SMMEs within the ICT sector. One of the outcomes of the workshop is that ICT usage can create opportunities for SMMEs to move up the economic value chain. This can lead to a future economy where a much larger proportion of SMMEs operate in the ‘zone of transition’ towards more sophisticated businesses. Some of the benefits which can be realised by these SMMEs include:
- higher turnovers,
- high staff turn-over; and
- a movement towards more differentiated businesses engaged in services, construction, manufacturing, and professional pursuits.
One of the key economic priorities in South Africa is industrialisation. As part of government’s radical economic transformation programme of this term of government, we aim to create hundred black industrialists in the next three years, who will participate in the productive sectors of the economy.
Government’s position on Industrialisation was cemented during the issuing of the seventh issue of the Department of Trade and Industry's Industrial Policy Action Plan (IPAP) in May this year. The plan highlights the development of a specific support framework for black industrialists.
The IPAP 2015’s Black Industrialists Development Programme is aimed at promoting industrialisation, sustainable economic growth and transformation through the support of black- owned entities in the mainstream of the South African manufacturing industry and related manufacturing sectors.
Conclusion
Government’s appeal is for the private sector to support and facilitate technology transfer within their companies as well as the development agenda. ICTs were put at the centre of the driving the 2015 Post Developmental Agenda by the United Nations Summit.
The full enhancement of e-learning calls for improved outcomes and professional development especially in rural schools.
I thank you.
