4ir Southafrica V01print

unlocking the potential of the fourth industrial revolution in Africa
study report
COUNTRY CASE STUDY

SOUTH AFRICA
Fourth Industrial Revolution (4IR) in Africa / Study on unlocking the potential of the fourth industrial revolution in Africa
tc
table of contents
Alison Gillwald, Enrico Calandro, Francie Sadeski, Matthieu Lacave
2
4 list of acronyms
6 chapter 01, introduction
8 chapter 02, country presentation
23 chapter 03, agriculture
29 chapter 04, energy
37 chapter 05, industrialisation
43 chapter 06, regional integration
50 chapter 07, wellbeing
55 chapter 08, overall conclusion for a business case in the country
58 chapter 09, recommendations
62 end notes
country case / South Africa 3

4IR Fourth Industrial Revolution

AfDB African Development Bank
AI Artificial Intelligence
AIC Africa Innovation Centre
BPESA Business Process Enabling South Africa
BPO Business Process Outsourcing
CHPC Centre for High-Performance Computing
COSTECH Commission on Science and Technology
CPI Corruption Perception Index
CRC Cyber Response Committee
CSIR Council for Scientific and Industrial Research
DAFF Department of Agriculture, Forestry and Fisheries
DAS Data Acquisition Systems
DER Distributed Energy Sources
DoHET Department of Higher Education and Training
DST Department of Science and Technology
DTI Department of Trade and Investment
DTPS Department of Telecommunications & Postal Services
ECTA Electronic Communications and Transactions Act
EHRs Electronic Health Records
EMR Energy Management System
ESS Energy Storage System
ETRI Electronics and Telecommunications Research Institute
EV Electric Vehicles
FDI Foreign Direct Investment
FTA Free Trade Area
LNG Liquefied Natural Gas
LTE Long Term Evolution
GDP Gross Domestic Product
GDPR General Data Protection Regulation
GIA Global Impact Accelerator
HDI Human Development Index
ICT Information and Communication Technologies
IFWG Intergovernmental FinTech working group
IoT Internet of Things
IP Intellectual Property
IPAP Industrial Policy Action Plan
4
A
list of acronyms
IT Information Technology
JCPS Justice, Crime Prevention and Security Cluster
NACI National Advisory Council on Innovation
NBII Namibia Business Innovation Institute
NCPF National Cyber Policy Framework
NCRST National Commission on Research Science and Technology
NDP National Development Plan
NeSPA National e-Skills Plan of Action
NERSA National Energy Regulator of South Africa
NHI National Health Insurance
NIA National Information Society Agency
NIPF National Industrial Policy Framework
NRF National Research Foundation
NRI Networked Readiness Index
NTBC National Technology Business Centre
OECD Organisation for Economic Cooperation and Development
POPI Protection of Personal Information
PPPs Public-Private Partnerships
R&D Research and Development
REDZs Renewable Energy Development Zones
REIPPPP Renewable Energy Independent Power Producer Procurement Programme
RISDP Regional Indicative Strategic Development Plan
SADC Southern African Development Community
SANSA South African National Space Agency
SANREN South African Research Network
SARB South African Reserve Bank
SITA State IT Agency
SME Small and Medium Sized Enterprise
STEAM Science, Technology, Engineering, Arts and Mathematics
STEM Science, Technology, Engineering and Mathematics
STI Science, Technology and Innovation
TTA TechTribe Accelerator
TVET Technical and Vocational Education and Training
US United States
WEF World Economic Forum
WIPO World Intellectual Property Organization

1
introduction
this document is one of the five country case studies drafted in the
framework of the Study to Unlock the Potential of the Fourth Industrial
Revolution (4IR) in Africa.
6
The overall study aims at i) understanding the The term AI encompasses so many evolving systems and
preconditions for adoption of 4IR technologies, challenges applications that it is not possible to attach this technology
and drivers, positive and negative effects; ii) describing to a specific technological readiness level (TRL). Rather,
the technologies for knowledge dissemination, including some AI applications are already at a high TRL, including
domains of application; iii) benchmarking emerging natural language processing and chatbots, fully self-driving
countries; iv) demonstrating applications in Africa; v) in cars (considered to be at a TRL of 7). Other AI systems are
order to conclude on a business case and vi) recommend still in their infancy, at lower TRLs, such as autonomous
interventions and vii) design specific ICT components surgical robotics, robotic personal assistants and cognitive
for AfDB projects, which will showcase the feasibility of cybersecurity. At a very low TRL are systems such as real
supporting the 4IR in Africa. time emotion analytics (Robotics Society Japan, 2015).
This case study thus looks in depth at the potential for the
adoption of key 4IR applications with diverse geographic,
political, economic, technological and social preconditions:
• it reviews the socioeconomic situation of the country

and the implications for technological readiness for
4IR;
• it assesses the potential for 4IR to be used in the key
economic sectors of the country, i.e. the High Five AfDB
priority fields, which are agriculture, energy supply,
industry manufacturing, regional integration and
well-being (including financial inclusion, smart cities,
education and healthcare);
• it concludes on the business case for the 4IR in the
country.
• it proposes recommendations at the national level;
• it envisions potential AfDB interventions or projects.
Our team collected data drawing on existing research

and public policy documents and by consulting local
stakeholders. This was done either by telephone, online
or in person. One field visit per case study country was
organised to allow the team to gain a deeper understanding
of the local conditions and peculiarities and to be able to
identify the most relevant use cases. The field visit took
place on site and included face to face meetings with
key stakeholders from government, the private sector,
researchers and NGOs (about 25 meetings).
The structure of the document is based on eight chapters.

It has been enriched and finalised following a workshop
with stakeholders that was held in early June 2019.

2
country presentation
8
2.1 ECONOMIC, SOCIO-DEMOGRAPHIC AND decades, the banking sector has moved from providing
INDUSTRIAL PROFILE traditional banking services, at first supplemented by
Although no longer the largest economy by GDP since it lost the installation of an extensive, world-class network of
its leading position in that respect to Nigeria, South Africa’s automated teller machines, to rolling out online and mobile
GDP stood at $276.1 billion in 2017. The population is e-banking services. A 2018 survey by Research ICT Africa
estimated to be over 55.4 million, with over 73.5% living shows that more than half of the South African population
in urban areas. Real GDP growth was an estimated 0.7% has access to financial services, far above the average
in 2017/18, down from 1.3% in 2016/17. Elevated global of 30% in the 10 African countries surveyed. These
risk factors and domestic policy uncertainty have had a developments include digitally based products such as
negative impact on South Africa’s economic outlook, with e-wallets, internet banking platforms, Blockchain-driven
the country performing well below global and emerging crypto-currencies and the advent of branchless banking.
market averages. Global growth for 2019–2020 is
projected to be only marginally above the 2018 estimate of 2.2 BROAD POLICY OBJECTIVES
3.5% while emerging markets and developing economies South Africa’s leaders have joined others in giving the
are expected to maintain their edge of 1% above that. moniker, the Fourth Industrial Revolution (4IR), to the
current wave of digitalisation. The strength of this raft
South Africa’s economic growth has been well below that. of technological innovations has the potential to propel
The country found itself in economic recession in the digitally ready countries into a new age of prosperity.
first two quarters of 2018, with the economy contracting However, inconsistent policy and regulatory failure in key
by 2.7% in the first quarter and by a further 0.5% in the enabling areas, particularly the telecommunications and
second quarter. Despite this, growth in the third (2.6%) energy sectors, have hamstrung South Africa’s readiness
and fourth (1.5%) quarters pushed overall growth for the for more widespread 4IR adoption.
year into positive territory, reaching 0.8% for the full year,
still below the 1.5% that had been forecast by the Treasury. Three central policies are shaping technological
Similar low figures going forward are projected by the developments in South Africa, both at the government level
International Monetary Fund (IMF). and industry level. These policies are the 2012 National
Development Plan (NDP), the 2013 National Broadband
Traditionally, South Africa’s economy has been dependent Policy (SA Connect) and the 2016 National Integrated ICT
on the primary sectors, particularly mining and agriculture. Policy White Paper.
In recent years, however, the contribution of the mining
sector has dropped significantly, while the tertiary sector National Development Plan.
- which includes wholesale and retail trade, tourism and The National Planning Commission’s National Development
communications - has moved to centre stage. This can Plan conceives of the ICT sector primarily within the context
be seen from the fact that, in 2017, 63% of GDP was of economic infrastructure and not as the central system
accounted for by the services sector – finance (20%), of the wider digital economy. The NDP’s vision for the ICT
government (18%), trade (15%) and transport and sector is that, by 2030, it is “expected to underpin the
communication (10%). By contrast, the contribution of the development of an inclusive dynamic information society
mining sector fell to a mere 8%, as it contracted, along with and knowledge economy” through the development of a
construction and agriculture (by as much as 4.8% in the “comprehensive and integrated e-strategy that reflects
case of the latter). the cross-cutting nature of ICTs”.
The telecommunication and finance sectors are among For its goals to be achieved, the NDP refers to new means of
the most developed sectors in South Africa, comparing assigning the spectrum that will become available following
favourably with those of industrialised countries. In recent the migration of terrestrial television broadcasting from

analogue to digital transmission and sets out a strategy access to the creation and consumption of a wide range
for universal access, including targets, monitoring and of converted services required for effective economic and
evaluation indicators. The NDP also identifies the need for social participation”.
demand-side stimulation strategies, such as e-literacy,
skills development and institutional development, and The policy identifies the need to overcome ‘structural
other strategies to promote ICT diffusion. Another key constraints’ in the sector along with the need to satisfy
focal point of the NDP is to build affordable access to pent-up demand for affordable broadband. The sharing of
a number of services through effective regulation of resources and infrastructure, including spectrum, is further
competitive markets. seen as a responsibility of the regulator to encourage
service-based competition in the market.
For the medium term, the period from 2015 to 2020,
the NDP endorses the target (proposed by the then However, the implementation of the plan has stalled. The
Department of Communications) of achieving 100% first-round target for 2016 of connecting 50% of the
broadband penetration by 2020 but expands the population at an average download speed of 5 Mbps has
definition of broadband from 256 Kbps to at least 2 Mbps. not been met by a wide margin. Other targets to connect
In the longer term it envisages the state making extensive 50% of schools and health facilities at a speed of 10 Mbps
use of ICTs in the delivery of services to citizens, including are therefore impossible to meet.
entertainment, information and education. And it suggests
greater collaboration between the state, industry and National Integrated ICT Policy White Paper
academia as being critical to the success of any e-strategy. In 2016, the DTPS released the National Integrated
The NDP’s broad vision of eliminating poverty and of ICT Policy White Paper to give effect to the 2015
reducing inequality by 2030 is supported by various stated recommendations of a multi-stakeholder ICT Policy Review
outcomes from the government’s 2014-2019 Medium Panel. Despite omitting to deal with audiovisual content
Term Strategic Framework, notably to ensure decent and services, including broadcasting, the White Paper aims
employment through inclusive economic growth (Outcome to address the development of converged technologies,
4), Comprehensive rural development and land reform digitalisation, communication, work, as well as the role of
(Outcome 7) and to protect and enhance environmental the internet.
assets and natural resources (Outcome 10). The NDP is
currently under review to assess South Africa’s readiness The White Paper aims to facilitate access to quality
for the 4th Industrial Revolution. communication and services by all South Africans with
the purpose of enabling economic growth, employment
SA Connect and wealth creation. The policy also aims at promoting
Completing a process launched in 2009, a national and stimulating domestic and foreign investment in
broadband policy, SA Connect, was finally announced ICT infrastructure, manufacturing, service, content
in 2013. and research and development. To achieve universal
access, the policy aims to ensure that services, devices,
In addition to responding to South Africa’s NDP, SA Connect infrastructure and content are accessible to all, including
attempted to lay the ground for an integrated supply-side people with disabilities.
and demand-side strategy to meet the NDP’s goals, and
envisaged that a: ICT Policy Assessed
South Africa’s ICT policy and regulatory environment over
“seamless information infrastructure will be universally the last ten years has not enabled the economy to capitalise
available and accessible and will meet the needs of on the country’s resource and financial endowments. The
individuals, business and the public sector, providing sector, a key economic enabler, has struggled through the
10
f
figure 01
SA Connect Vision, SA connect Policy Brief (RSA 2013)
mire of political, institutional and leadership incapacity, and Postal Services and a Department of Communications.
leaving the wider economy to lag behind in terms of This undermined a decade of convergence legislation
performance as others ride the wave of economic and and regulations, leaving critical policy and regulatory
social digitalisation. actions in limbo.
The lack of progress in implementing SA Connect can be However, the urgent need to develop a realistic set of
attributed to a number of poor policy decisions, diversion smart policy interventions attuned to the challenges that
from consultative policy processes by government, lack of the digital revolution will bring to the economy and the
state co-ordination and protracted legal and regulatory society remains and has led the DTPS to propose a slew of
processes and indecision. At the core of this was the legislative changes (see Figure 3 below). Some of these
division of the former Department of Communications have been enacted, but most are currently stalled.
into two: an old-style Department of Telecommunications

figure 02
DTPS White Paper Interventions
LEGISLATIVE PROGRAM
1. Amendment of the following legislation ICT sector laws: Electronic Communications Act (ECA), Electronic Communications
and Transactions Act (ECTA), Postal Services Act (PSA) and State IT Agency Act (SITA)
Action 2. Development of the following Bills (rationalisation of current institutions): ICT Commision and Tribunal Bill, Ikamva National
e-Skills Institute (INESI) Bill, Digital Development Fund (DDF) Bill and ICT State Infrastructure Bill, South African Post Office
Amendment Bill
1. Bills to be introduced to Parliament in 2018/19 ECA, INESI, Postal Services Amendment Bills
2. Bills to be introduced to Parliament in 2019/20 Digital Development Fund, ICT Commission and
Progress Tribunal, Postbank Amendment
3. Bills to be introduced in Parliament in 2021/22 State IT Agency Amendment Bill, State ICT Infrastructure Bill, Electronic
Communications and Transactions Act Bill
1. Cabinet has approved the SOC Rationalisation Framework Document, Business Cases being developed to support
legislation drafting
Next steps 2. Development and approval of the Business Cases to establish the ICT Sector Commission & Tribunal, Digital Development
Fund, SITA and State Infrastructure company
3. Development of Money Bil for the DDF
Policy coherence and certainty, enabled environment for investment, enhanced competitiveness of the sector, consumer
Impact protection, transformation, improved capacity of the State to deliver, universal service and access, opening access to critical
infrastructure, modernisation of SAPO and transformation of the postal sector
1. ECA and INESI already introduced
2. Postal Services Amendment Bill in Cabinet Committee 17/10/2018
Timelines
3. DDF ICT Sector Commission and Tribunal Bill to be gazetted for public consultation by end of financial year
4. Input into the Financial Related Matters Amendment Bill - to support the Postbank Amendments
SOURCE
Department of Telecommunications and Postal Services
The DTPS has subsequently adopted the moniker of the government in directing attention to the opportunities that
4th Industrial Revolution and is involved in a number of the digital revolution may present to many sectors in South
initiatives as the country searches for a comprehensive, Africa, including agriculture, manufacturing and mining.
converged and cross-cutting strategy to prepare for the
4IR and its implications for all sectors of the country. According to its terms of reference, the 4IR Commission
These initiatives include developing a national digital skills needs to ensure that the integration of digital processes
strategy, along with a draft 4IR framework, and appointing boosts and enhances competitiveness while achieving
a 4IR Commission. inclusive growth, with particular attention to rural
development and encouraging the participation of youth
2.3 POLICIES SPECIFIC TO 4IR TECHNOLOGIES and women across the 4IR value chain.
In 2019, President Ramaphosa appointed a Commission on
the 4th Industrial Revolution (4IR Commission), consisting Furthermore, a 4IR Inter-Ministerial Committee has been
of some 30 stakeholders, including successful start-ups, established to co-ordinate efforts within government
academics, captains of industry and public officials. Co- and with the Council. The Ministries of Science and
chaired by Professor Tzilidizi Marwala from the University Technology and Trade and Industry, have, together with
of Johannesburg, the 4IR Commission will assist the higher education and energy sectors, successfully driven
12
innovation policy and already developed 4IR focal points market place of goods and services via a cloud-based
and initiatives. Supporting the 4IR Commission will ecosystem that is accessible to users and sellers.
require a substantial shift and take-up of skills within the
Department, which has historically lacked the capacity to Developing digital skills
undertake policies. To provide citizens with the requisite skills to take part
in South Africa’s digital economy and to protect their
Public sector use of ICT employment potential, a comprehensive turnaround
The adoption and use of ICT by the public sector in South strategy was developed by the Department of Higher
Africa has been notoriously bad. For example, whilst Education and Training (DoHET) for the 50 Technical and
South Africa is ranked 2nd in Africa (behind Mauritius), Vocational Education and Training (TVET) Colleges. The
it is in 68th place out of 193 countries on the UN’s 2018 DoHET has also identified on-the-job training and short
E-Government Development Index. courses as the approach to take for workplace upskilling
in the face of the likely employment impacts of the 4th
Partly in response, the DTPS has developed a National Industrial Revolution and to achieve the national objective
e-Government Strategy aimed at modernising and of global competitiveness.
transforming future public service delivery, following
the 2014 move of the State IT Agency (SITA) from the A policy priority area to prepare for the 4th Industrial
Department of Public Service and Administration to Revolution, aligned with the objectives of the NDP and
DTPS, on the back of poor performance and widespread SA Connect, is the development of digital skills across the
corruption and maladministration. board from pre-primary to tertiary levels and covering
both attitudinal approaches and soft skills such as critical
The diagnostic report of the NDP had already pointed to thinking as well as harder ICT skills. The DTPS is currently
problems at SITA as underpinning poor performance of the developing a comprehensive National Digital Skills Strategy
public sector in terms of ICT adoption and usage. Rather to update its earlier National e-Skills Plan of Action (NeSPA)
than reducing state expenditure on ICT services through and is seeking the passage of enabling legislation for the
the economies of scale and scope, services which national iKamva Digital Skills Institute.
and provincial departments were statutorily obliged to
use came at a premium. A new CEO (the 18th in almost as Science technology and innovation
many years) started a turnaround seen at SITA but it was While ICT sectoral policy lagged behind, the Department of
not completed before he left in 2019 after not renewing Science and Technology (DST) has taken a leading role in
his contract. the last two decades with regard to innovation, foresight
planning and implementation. It has established an
Within the public sector, intergovernmental communication integrated national research and innovation framework
is poor. There is no sharing of data and information in the form of a series of White Papers on research and
between national departments and between national and development, innovation and roadmaps for ICT and
provincial governments, and at local government level it is innovation. The National Advisory Council on Innovation
arguably worse. (NACI), which was established in 1997, continues to
articulate and implement a vision that seeks to contribute
Adopting a business approach instead of a bureaucratic to the realisation of the NDP’s vision for science, technology
one and 4IR projects planned by SITA seek to address and innovation. Its strengths include the ability to mobilise
this by creating a new business model. This has required science, technology and innovation (STI) stakeholders and
shifting to wholesale operating from an old tendering and to access both local and international experts. The NACI
procurement business that was riddled with inefficiency aims to continue to strengthen STI planning, monitoring
and corruption. The aim is to have a transparent digital and evaluation capability and plans to conduct a foresight

exercise whose results will contribute towards the part of a four-country African initiative, work has begun on
development of a decade-long plan for STI. the ZA-ARMC1 satellite, which will boost Africa’s ability to
monitor and manage its precious natural resources.
Furthermore, a recently updated White Paper on Science,
Technology and Innovation specifically sets out to update Trade and industry
the country’s science, technology and innovation (STI) The Department of Trade and Industry has also engaged
policy in the light of the “significant changes that are with the 4th Industrial Revolution, establishing a Future
associated with the Fourth Industrial Revolution”. The Industrial Production and Technologies unit to investigate
new White Paper offers several strategies and revised the possible impacts of the 4IR and to prepare to address
institutional arrangements to improve South Africa’s the ensuing challenges. The DTI points to some potential
preparedness for the 4th Industrial Revolution. One threats of the 4IR:
is that, while the NACI will continue to provide advice
on innovation trends and to focus on the foundational • structural changes to global value chains, including
STI discipline, on developing infrastructure and human selective ‘reshoring’ of industrial processes to major
resources on addressing poverty, unemployment, markets in advanced economies;
inequality and on promoting economic growth and social • significant technology-driven job losses in retail and
development, a high-level structure of ministers whose services, mining and parts of manufacturing value
functions overlap with STI will be established. This will chains, particularly for lower-skilled workers;
provide the financing for much-needed interventions • growing inequality and exclusion;
that cut across departmental budgetary and performance • the danger of ‘winner-takes-all’ outcomes, leading
silos. Engagement with the private sector through to a greater concentration of production and higher
industry associations such as MINTEK (mining) and AgriSA barriers to entry17.
(agriculture) will also be boosted.
Policy Capacity
The DST focuses on the Council for Scientific and The standard policy cycle is not suited to responding
Industrial Research (CSIR) to strengthen industrial policy quickly enough to these technological and scientific
in the country. Beyond investing extensively in military and developments. This leaves policy and regulation
industrial research, the CSIR is actively engaged in national floundering to keep up with the pace of change. In addition
ICT research, development and innovation through the to often being subsumed by ongoing updates, policies in
Meraka Institute. South Africa tend to lack regulatory clarity. For example,
while a clear and integrated data governance framework
The DST’s ICT RDI strategy aims to increase advanced is required to provide a safe and secure environment for
human resource capacity, to promote world-class research citizens and enterprises to transact online, laws dealing
and to build innovation chains for the creation of new high- with part of the governance framework are legislated
tech ICT Small, Medium and Micro Enterprises (SMMEs). without reference to each another, with some even facing
Although the strategy includes partnerships with the constitutional challenges.
private sector and higher education institutions, the bulk
of state investment has gone into the Meraka Institute, It has proven difficult to enable sector regulators to carry
which manages and coordinates the implementation of out their mandates with industry cooperation and without
the strategy. ambiguity, as illustrated by the controversies surrounding
the now withdrawn amendment to the Electronic
Through the South African National Space Agency Communications Act and the soon to be promulgated Film
(SANSA), the country’s capacity to design, build, maintain and Publications Board Amendment Act. Furthermore,
and possibly even launch satellites is being developed. As updates to other legislation with a key impact on 4IR
14
readiness are long overdue: in particular, to the 2002 The figure 3 shows the evolution of South Africa’s
Electronic Communications and Transactions Act (ECTA), governance indicators over time.
from which other regulations related to cybersecurity
derive and the 2002 Regulation of Interception of Despite problems associated with global data collections
Communications and Provision of Communication- and indices, they are broadly indicative of performance
Related Information Act. - and South Africa does not perform well. For example,
South Africa is ranked 92nd out of 176 countries in
With regard to the 4th Industrial Revolution specifically, the 2017 ICT Development Index of the International
South Africa will soon join the World Economic Forum’s Telecommunication Union (ITU), which comprises four
Centre for the 4th Industrial Revolution (C4IR) network - sub-indices addressing access, use and skills, respectively,
alongside China, India and Japan - by launching an Affiliate and 22nd out of 58 countries on the Affordability Drivers
Centre as a public-private partnership based at the Council Index (ADI) from the Alliance for Affordable Internet. The
for Scientific and Industrial Research (CSIR). The C4IR was GSMA’s 2017 Mobile Connectivity Index - which measures
launched in 2017 as a hub for global, multi-stakeholder the performance of countries in four areas: infrastructure,
co-operation to develop policy frameworks and advance affordability, consumer readiness and content - ranks
collaborations that accelerate the benefits of science South Africa 90th out of 163 countries and EIU’s 3i
and technology. The key portfolios include: Artificial (Inclusive Internet Index) has South Africa ranked 27th out
Intelligence and Machine Learning; the Internet of Things, of 75 countries. The figure 4 summarises this.
Robotics and Smart Cities; and Digital Trade.
By 2016, out of 100 persons, there are an estimated
2.4 LEVEL OF READINESS OF THE COUNTRY FOR THE 4TH eight internet users in South Africa. According to the
INDUSTRIAL REVOLUTION GSMA’s Mobile Connectivity Index, 156% of South Africa’s
An examination of a range of global indices compiled population use mobile phones, with mobile broadband
by international entities is commonly used to chart penetration standing at 90%. Figures like these rely on
progress with regard to ICTs, which are a pre-requisite numbers of ‘active’ SIM cards not unique subscribers,
to economic growth and human development and to which substantially overstates the user base, particularly in
achieving the Sustainable Development Goals (SDGs) of prepaid markets. In 2017, Research ICT Africa conducted
the United Nations. nationally-representative demand-side surveys in 10
African countries, including South Africa, providing more
South Africa has slipped down the rankings in a number of accurate take-up estimates and showing that South Africa
global economic indices over the last 10 years. For example, has the highest internet use (53%) among the countries
once ranked 45th in the WEF’s Global Competitiveness surveyed (Ghana, Kenya, Lesotho, Mozambique, Nigeria,
Index, the country is now rated 67th out of 140 countries Rwanda, Senegal, South Africa, Tanzania and Uganda) and
assessed. However, South Africa’ performance is uneven, the second highest mobile penetration at 85%. Whilst the
ranking 18th in the financial systems sub-index, 35th gender-based disparity in internet usage gender disparity
in the market size sub-index and 46th in the innovation is a relatively low 12% in South Africa, a significant gap
capacity sub-index. By contrast, the country performs exists between rural and urban areas: 61% of South African
poorly in a number of human development sub-indices - urban residents use the internet whilst less than half
125th in health, 85th in ICT adoption and 84th in skills. (39%) of those in rural areas do so. With the highest GINI
coefficient in the world – at 0.62 - nationally aggregated
Corruption is also an issue, with South Africa having fallen figures such as GDP per capita or internet penetration
14 places since 2000 under ‘control of corruption’ in the figures mask extreme inequality.
Worldwide Governance Indicators, dropping out of the
top quartile.

figure 03
WGI South Africa’s rank- Percentile rank 0 (lowest) to 100 (highest)
control of corruption
Rule of law
regulatory quality
Government effectiveness
political stability and absence of

violence / terrorism
voice and accountability
0 10 20 30 40 50 60 70 80 90
2007 2012 2017

SOURCE
World Bank’s Worldwide Governance Indicators (WGI) Database
The state of infrastructure development and technological environment needs to be built. The 2017 After Access
advancement is a critical component of the ability of survey shows that lack of education and the consequent
countries to embrace the 4th industrial Revolution. For lack of income is a critical barrier to adoption and use of
many industries, advancements in Artificial Intelligence, the internet.
robotics, 3D printing and the Internet of Things will put
pressure on companies to move towards automation to Labour supply and demand in the country is misaligned,
remain competitive in the global market. The ability of with an oversupply of graduates and a shortage of
industry to embrace the 4IR relies on available, affordable technicians. Furthermore, graduates are primarily in the
high-speed internet as well as access to stable and reliable humanities and social sciences rather than in science,
electric power. engineering and computer science. Despite significant
growth in the number of PhD graduates since 2009 (with
The adoption of 4IR technologies also implies a substantial 2,797 doctoral graduates in 2016) , this is far below other
shift in labour market demand and a need to realign and middle income and emerging economies.
improve the skills base. A pipeline of future talent that
can embrace the 4IR dynamic in an increasingly complex
16
f
figure 04
South Africa’s ranking in the ITU’s ICT Development index, 2017
Based on the WIPO’s 2018 Readiness for the Future of An effective cybersecurity framework and proper data
Production Report, which measures the rate of technology governance measures are essential in the context of
and innovation across 100 countries, South Africa is in the 4IR. However, South Africa’s readiness for the 4IR is
45th and 49th position on the structures of production constrained by the lack of an overarching data governance
and the drivers of production, and according to this framework or an open data policy framework. Government
report, South Africa is one of the three G20 countries has not shown leadership either in co-ordinating with the
that showed the lowest levels of readiness. Concerning private sector or in the adoption of new technologies for
the ability to innovate, South Africa is one of the highest the purposes of administration or for service delivery. The
ranking countries in Africa, even though its values (on a troubled SITA did attempt to develop a public sector plan
scale on 0-10) still fall slightly below the median for state for the 4IR but was unable to secure sufficient budget
of cluster development, company investment in emerging before parliament rose.
technology, companies embracing disruptive ideas, multi-
stakeholder collaboration, R&D expenditures, scientific Cybersecurity also lacks institutional mechanisms for
and technical publications; but needs to improve more on promoting safe information flows across government
R&D expenditure and patent applications. regarding cyber threats and how to respond to them. In

addition, the Cybersecurity Response Committee, which • the Cabinet Justice, Crime Prevention and Security
is chaired by the Director-General of State Security, has Cluster (JCPS) Cluster, led by the Minister of Justice, is
not surprisingly been criticised for lack of transparency. in charge of reviewing all related legislation to ensure
Furthermore, the National Cybersecurity Policy Framework harmonisation and alignment;
(NCPF), which has been slow in implementation, does • the DTPS is part of the Cyber Response Committee
not deal directly with 4IR issues, and its approach to (CRC) established under the Cluster and is thus
dealing with issues related to the internet leaves much to involved in ensuring alignment with the ECTA; and
be desired. • the State Security Agency, which is tasked with the
overall responsibility of cybersecurity.
A number of different departments and agencies have had
responsibility for different aspects of data governance, The plethora of organisations, clusters and structures
including the Department of Telecommunications and involved – many of which involve potential traditional
Postal Services, the Security and Justice cluster, and now rivalries – suggest that coordination could be problematic.
the Information Commissioner, appointed in terms of the Other challenges relate to implementation efficacy,
Protection of Personal Information Act (POPI). including the degree to which the NCPF demands
institutional arrangements for which it still lacks
The 2013 Protection of Personal Information (POPI) Act administrative and technological skills to actually deliver.
has substantial similarities to the EU’s 2016 General Data
Protection Regulation (GDPR). It was released in 2009 and ICT LANDSCAPE IN SOUTH AFRICA
enacted in 2013 but has as yet only partially come into full International bandwidth
effect. The new information regulator, established by POPI, Since 2009, a number of new undersea cables have been
has only recently started actively investigating privacy laid around South Africa, on both the east and west coasts.
breaches. As with the GDPR, POPI provides a measure of Today, there are six submarine cables connecting the
cross-border protection for data subjects. country to the rest of the world, with more being planned.
These investments have improved the quality and speed of
Nonetheless, a number of measures are being put in place broadband and led to a massive reduction in prices and a
to deal with cybersecurity issues. These include: the 2012 consequent surge in demand.
National Cyber Policy Framework (NCPF), setting out
measures and mechanisms for better co-ordination across National transmission
government; the 2015 National Cybersecurity Policy Considerable backbone and backhaul investments have
Framework (NCPF); followed by a troubled Cybercrimes been made in recent decades by a number of network
and Cybersecurity Bill, now substantially reworked and providers, including Telkom, Liquid Telecom, Broadband
renamed as the Cybercrimes Bill (with its cybersecurity InfraCo and the mobile operators, giving South Africa
provisions removed) . the most advanced and extensive infrastructure on the
continent. This has been supplemented in recent years by
From an institutional design point of the view, South Africa a greater focus on the expansion of fibre networks in the
has adopted an interagency approach to cybersecurity. affluent suburbs in large metropolitan areas. Together with
The government recognised that the issue of cybersecurity the backhaul investments made by the MTN, Vodacom,
is cross-cutting and cannot be addressed by one and Neotel, South Africa is estimated to have over 80,000
department alone. In line with this, a number of government km of unduplicated and 120,000 of duplicated fibre.
departments are jointly involved in cybersecurity. These
include: Mobile coverage
These developments have given South Africa one of the
most advanced telecommunications infrastructures
18
t
table 01
South Africa’s performance on the NRI’s sub-indicators
ENVIRONMENTAL- 33 READINESS- 69 USAGE - 75 IMPACT-93
Political and Infrastructure and digital content

Individual, 77th Economic impacts, 57th
regulatory environment, 26th development, 44th
Affordability, 74th Business, 32nd
Business and innovation, 65th Social impact, 112th
Skills, 95
th
Government, 105 th
SOURCE
WEF Global IT Report, 2016
on the continent. The country’s ranking on the WEF’s in southern Africa, the amounts of data being collected
Networked Readiness Index (NRI) has improved since and transmitted by the SKA mean that the project requires
2014 to 65th out of 139 countries, second only to the supercomputing power and Big Data management and
top-performing African country, Mauritius. This upsurge is, analytics capabilities, along with unprecedented data
however, mainly business driven, as the country performs connectivity. Meeting the advanced technological and
best in business usage (32nd), followed by individual engineering needs of this project has resulted in significant
usage (77th) and government usage (105th). In terms of local skills development and enabled innovative new
business innovation, South Africa is ranked 65th out of businesses and employment in the science, technology
139 countries. and engineering fields.
The Centre for High-Performance Computing (CHPC), the Human capital development is already taking place as a
South African Research Network (SANREN) and the Very result of the SKA project, with bursaries and scholarships
Large Databases are the three pillars of cyber-infrastructure being granted to allow students to learn the necessary
that the DST supports. Hosted by the University of Cape cutting-edge science, technology, maths and engineering
Town and managed by the CSIR’s Meraka Institute, the skills to support the project. Given that the SKA is a log-
CHPC was the first of its kind in South Africa and is making term project over decades, its effect will increase. There is
scientific supercomputing a reality for South Africa. also an effort being made through significant investments
by the NRF in PhD registration with some positive results
Another major DST initiative, jointly with the National and a DST programme to support developers of patents,
Research Foundation (NRF), is the multibillion-rand Square though they remain low in number. Going forward, there
Kilometre Array, hosted in South Africa and Australia, and will be a strong drive to leverage the SKA as a spearhead
extending into eight African countries. When it becomes for other programmes, including next-generation high-
operationally mature in 2020, it will be the world’s biggest performance computing and Big Data.
telescope. It is also one of the biggest ever scientific
projects involving multinational collaboration. With South Africa also hosts the world’s largest 3D printer, which
thousands of linked radio wave receptors in Australia and uses titanium powder to build very complex objects. The

project is funded by the DST and it has been developed programmes into provinces and townships was a complex
from a collaboration between the Aerosud Innovation task, with initiatives reinforcing apartheid spatial realities
Centre and the CSIR’s National Laser Centre on Pretoria. and dependencies rather than integrating those acquiring
Taken together, these initiatives by the State compensate skills into the urban markets and elite parts of the cities
enormously for low R&D investments by the private sector. where there are job opportunities.
On average, and compared to the value of their sales, South
African manufacturing firms spend seven times less than The more economically developed provinces of Gauteng
American companies on research and development (R&D). and Western Cape have also developed innovation
initiatives often together with the megacities of
The following sections will provide an analysis of the Johannesburg and Cape Town - the Gauteng’s Innovation
sectors that are using some sort of 4IR technology and Hub, Jozihub and the Cape Innovation and Technological
the potential that they present for investment. The sectors Initiative (CiTi).
analysed are agriculture, energy, industrialisation, regional
integration and well-being.
Tech Hubs, Incubators

To encourage the development of technological innovators
and their conversion to viable businesses, South Africa has
a strategy to support incubators and technology hubs.
By 2018, the GSMA was reporting 442 technology hubs
and incubators in Africa, with some 13% of them located
in South Africa. These include the Gauteng’s Innovation
Hub, Jozihub and the Cape Innovation and Technological
Initiative (CiTi), and MLabs in both centres.
The World Bank was responsible for seeding MLab in

Tshwane as a start-up incubator and activities are
focused on a skill acceleration programme with consistent
funding from the Department of Science and Technology.
Combined with shorter term grants and partnership
with the private sector (particularly some of the bigger
names such as Nokia, Google Play, Microsoft and Intel)
the lab is more engaged in enterprise skills development
programmes with the major local skills accelerator and job
connector Harambee.
The Department for Science & Technology (DST) also funded

the Industry Innovation Partnership, which was developed
by MLab specifically in response to the NDP identification
of e-skill needs in the economy. The programme is rolled
out at the provincial level with co-funding from provincial
departments of economic development. Although it was
a success in terms of the numbers of people trained,
the head of MLabs mentioned that trying to extend the
20
22
3
agriculture
figure A
current level of utilization of technologies
artificial big data analytics blockchain drones 3D printing IoT

intelligence
potential for applications

intelligence
LEGEND
red, not many / few examples; yellow, nascent / some examples; blue, good potential /numerous examples
24
3.1 PRESENTATION to large-scale capital-intensive farming. The growth in the
The agriculture sector accounts for a relatively small sector is hampered by many socio-political issues, such
share of the country’s total GDP. The sector’s contribution as lack of title deeds, limited access to finance, especially
to GDP has declined from 3.9% in 1994 to just 2% in for smallholders, water rights issues and infrastructure
2018. However, agriculture, forestry and fishing were constraints such as limited road network, storage and
the sectors with the highest growth during Q4 of 2018, warehousing facilities. Many farms are not connected to
at 7.9%. Despite its small share of total GDP, the sector the internet.
is an important sector in the South African economy. It
remains a significant provider of employment, especially The current political debate surrounding appropriation of
in rural areas, and is a major earner of foreign exchange. It land without compensation is creating uncertainty within
is estimated that close to 8.5 million people are directly or the agriculture sector, which is delaying investments
indirectly dependent on the industry for their employment and strategic business ventures. Agriculture yield and
and income. In addition, the issues of land redistribution total production are also directly affected by adverse
and job creation, together with those of food security, are weather conditions - flooding in some parts of the country
increasing the importance of the agriculture sector in the and drought in others. The effects of global warming
government’s transformation agenda. and climate change have without doubt also affected
agricultural output. While this cannot be controlled, it can
South Africa has close to 35,000 registered commercial be avoided by better irrigation planning and also by the
farms, 40% of which are engaged in field crop farming, appropriate use of technology.
with 60% focused on livestock farming. Over 2017/18,
agriculture production was estimated at 62.9 million The Department of Agriculture, Forestry and Fisheries
tonnes (a 24% increase from 2016) valued at R281,370 (DAFF) is responsible for the agriculture sector in South
million (a 4.7% increase). Since 1994, the agriculture Africa. Its mandate is to ensure collaboration across sector
sector has shown a growth rate of 7.5% per year. value chains, inputs, production and consumption in the
agriculture, forestry and fishery sectors.
According to the AfDB, the agricultural productivity index
(which measures the relative level of aggregate volume The DAFF’s focus is to improve food security; create jobs;
of agricultural production for each year by comparison increase the sector’s contribution to the GDP; enhance
with the base period of 2004-2006) of South Africa primary animal healthcare services and enable trade in
has increased to about 148 from 117 in 2006. In 2019, the global economy. The agriculture sector can potentially
there were over a million people involved in agriculture, play an important role in achieving the goals of the NDP,
with women representing about 30% of this population. especially in ensuring household food security and through
Commercial farmers produce most of the agricultural job creation (the NDP sets a target of close to one million
output in South Africa. The country has a total of close new jobs by 2030). This requires areas under irrigation to
to 70,000 commercial farming units, but only 4% have be more than doubled, the cultivation of underutilised land
an annual turnover exceeding R5 million. Some 75% of in communal areas, support for commercial agriculture
all South African farming is carried out by smallholders, with the highest growth and employment potential and
with small-scale farming the primary source of food in finding creative ways to increase collaboration between
rural areas. commercial and small farmers. The sector is seen as a
creator of jobs and recognised as a driver of inclusive and
The contribution of the agriculture sector has waxed and sustainable growth, providing a foundation for nutritious,
waned in relation to the resources and services sectors. safe and affordable food. However, there are no clear
Its make-up has almost entirely shifted over the last implementation plans to implement the NDP goals.
century from mixed subsistence and commercial farming

3.2 RATIONALE FOR SUPPORTING THE ADOPTION OF 4IR The technological developments in the agriculture
TECHNOLOGIES sector should not be seen as an alternative to existing
3.2.1 Potential applications and impacts farming practices or a way of substituting labour but as
The government’s objective is to eradicate poverty, a complementary and supporting tool that can provide
inequality and unemployment. As noted above, the benefits in terms of both inputs and outputs. The increase in
NDP identifies agriculture as a key sector for economic agricultural productivity and production has the potential
growth and job creation. But, with the current reality and to contribute substantially to economic development.
uncertainty around land reform, it is unlikely that the NDP’s Failure to integrate new technologies into the agriculture
targets will be met. sector can lead to more job losses, decreased output and
lower economic growth.
The available commercial agricultural land currently
stands at 82.2 million hectares. The population is expected The agriculture sector reflects South Africa’s dual economy,
to increase by some 15% over the next 15 years to reach with medium to large farmers using drones and satellite
70 million by 2035 and the current rate of urbanisation imaging for data collection whilst small farm holders
means that 75% of the population will live in cities, leaving struggle to obtain financing even for seeds and irrigation.
fewer people in rural areas to work the land. Furthermore, Integrating the right technology is essential to modern
arable land around larger cities is increasingly being taken farming. It increases farming efficiency, which, in the long
for housing. Projections therefore suggest that the amount run, can influence the profitability of the sector and, in
of available commercial agricultural land will fall to 70.2 turn, lead to a scalable and sustainable way of ensuring
million hectares by 2035. The current per capita availability food security in the country.
of agricultural land is thus expected to decrease from the
current 1.6 hectares to only 1.1 hectares of land by 2035. 3.2.2 Current use cases and level of technology take-up
Together, this means that greater productivity is needed to The make-up of South Africa’s farming landscape differs
sustain the growing population and ensure food security, dramatically from the rest of the region, with close to
presenting opportunities to adopt technology solutions of 90% of farming output produced by commercial farmers,
the kind offered by the 4IR. This will likely lead to automation whereas in the east and west Africa 9o% of output
and loss of some manual jobs, although new technology- comes from small farmers. Unsurprisingly then, the large
intensive jobs will also be created, requiring new skill sets commercial farmers are the early adopters of technology
and the realignment of labour supply and demand. in South Africa, with the exposure to new technologies and
the resources to deploy them to enhance efficient and
There is a need to ensure inclusive transformation and sustainable farming practices.
upliftment of the agriculture sector, integrating small
farmers into the larger agriculture value chain, building In terms of farming practices, drones, satellite imaging
collaboration and a sense of a shared economy between and Artificial Intelligence are the key technologies shaping
large and small farmers. Awareness needs to be built as the sector in preparation for the 4th Industrial Revolution,
to how integrating technology can lead to more efficient with Blockchain a possible, albeit still embryonic, option
farming practices and help address challenges like to resolve land registry issues relating to apartheid land
water deficits and rising input costs. The increased use claims. Furthermore, Artificial Intelligence can provide
of IoT sensors, drones and satellite imaging will lead to solutions for control of agriculture inputs, for monitoring
the increased use of Artificial Intelligence and Machine soil moisture and irrigation, water management services
Learning. Blockchain also has application for the resolution and for predicting areas that may be at risk of developing
of conflicting land claims and the registration of land pests and diseases.
previously without title deeds, such as tribal land.
26
However, smaller farmers are apprehensive about
adopting new technologies due to their cost and have
limited awareness as to the benefits of leveraging a drone
or satellite imaging to increase productivity. Furthermore,
connecting small farm holders to agribusiness continues
to be an important gap, together with identifying who
these farmers are, where are they located and what they
are producing. It is, however, one that can be addressed
with the technology. For example, one supplier has
developed a platform to communicate with small-scale
farmers via their mobile phones using SMS. Technology
can empower small farmers to have a large footprint in the
agriculture value chain, not only addressing challenges but
unlocking opportunities.
Providers see the use of technology as a complementary

tool to make farming more efficient and more cost effective
and to increase yields and reduce costs – rather than to re-
invent farming processes. Technologies - such as wireless
communication technologies, data management and
analytical tools, remote sensing, robotics, drones, satellite
systems and Artificial Intelligence - are being integrated
to develop services that enable precision agriculture,
reducing costs, conserving resources, optimising inputs
and maximising outputs and allowing statistical analysis
and predictions of output.
3.2.3 Drivers and challenges specific to agriculture

Apart from start-ups driving technological adoption in
the sector, the key preconditions for the take-up of 4IR
technologies are reliable electricity supply, affordable
internet connectivity and increased access to finance for
small farmers.
The technological development of the agricultural sector

is, however, constrained by a lack of qualified professionals
and technicians as agricultural colleges are struggling
to deliver technically skilled people required for both
farm management and skilled workers, and to increase
students’ exposure to modern agricultural practices and
practical fieldwork.
However, the payoff for success is substantial: agriculture

is estimated to be twice to four times more effective in
reducing poverty than any other sector.

4
energy
figure B

intelligence

intelligence
LEGEND
30
4.1 PRESENTATION South Africa is endowed with a broad spectrum of
The focus of this chapter is on the pressing issue of South abundant energy resources, primarily fossil fuels such as
Africa’s shift from its fossil fuel-based energy economy to coal, uranium, liquefied fuels and gas while biomass forms
a more sustainable future based primarily on renewable the main energy source for rural households. Renewable
energy and the potential application of 4IR technologies in energy sources, such as solar and wind power, pumped
that transition. storage and hydro-power schemes, are already being
explored. This should provide the necessary infrastructure
Traditionally, the sector as a whole is divided into two as an economic basis to attract foreign investments into
main sub-sectors – namely the electricity sector and the the energy sector. South Africa’s current energy mix is
liquefied fuels sector – mostly used in transport. This made up of coal (81%), nuclear (4%), gas (5%), hydro
chapter, however, focuses on the electricity sector. The (4%) and wind/solar (5%). However, the inability of the
significant changes with regard to liquefied fuels and the sector to guarantee a stable supply of electricity presents
transport sector (e.g. innovations in batteries and energy a major challenge to the ailing economy and curtails the
storage) that will have a profound impact on South Africa’s opportunities of the 4IR. Electricity production from solar,
cities, tax structure and industrial base are not addressed wind, tide, wave and other renewable sources has been
in this chapter. increasing in recent years standing at 899.64GWh in
2015. By 2012, about 100% of South Africa had access to
electricity already. Figure 6 below provides more insight on
some energy parameters in South Africa.
figure 05
evolution of access to electricity in South Africa
120
100
80
60
40
20
1990 1995 2000 2005 2010 2016
access to electricity, urban (% of urban population) access to electricity, rural (% of rural population)
proportion of population with access to electricity (%) proportion of population with primary reliance on clean fuels and technology (%)

Eskom is synonymous with electricity in South Africa, of the nation. Accordingly, government has sought to
providing 95% of generation capacity (of which 90% is coal ensure that affordable energy be available to all. However,
fired) and has been run as a vertically integrated electricity energy production and distribution should not only lead
monopoly since the 1970s. There have been efforts to to an improvement in the standard of living for all of the
restructure Eskom since the 1990s. For example, the 1998 country’s citizens but should also be sustainable. Policy flip
Energy White Paper, which remains official energy policy, flops in the early reform years and the failure to implement
contemplated breaking up Eskom and allowing competition reforms intended to transform the public utility into an
and private investment. Consequently, at the time, any efficient and competitive company, together with large
new investment by Eskom was discouraged. However, its scale mismanagement and corruption, have undermined
management responded to this threat by entering into Eskom’s critical role.
a series of price pacts in which it sold electricity below
the cost of production (taking capital depreciation into Energy White Paper of 1998
account). Furthermore, Eskom’s important role in the Aligned to the policy of reconstruction and development,
government’s electrification programme enabled the the White Paper addresses the challenges of transforming
company to sidestep any attempt to introduce private state-owned entities and of reshaping their governance
investment or competition. principles, together with enhancing socio-economic
welfare for communities, and even changing people’s
With revenues of about R180 billion, Eskom ranks as one attitudes towards the value and use of national energy
of the largest companies in South Africa, with 3.5 million resources . Its policy objectives included extending access
customers (including domestic users), and a massive to affordable and sustainable energy to a wide range of
distribution business. Its nominal generating capacity communities and establishments.
of 44 MW and generation of over 200 TWh of electricity
annually ranks it amongst the top twenty electricity utilities In line with global reform, the government established
in the world. Its 28,000 km transmission grid is one of the a clear distinction between its primary policy-making
world’s biggest. With a bloated workforce of 47,000, it is role and its secondary role as a facilitator in the supply of
one of the biggest employers in the country and ranks energy services. Accordingly, in 2004, the National Energy
as one of the top 10 utilities worldwide measured by the Regulator of South Africa (NERSA) was established as
number of employees. an autonomous dedicated entity to regulate the energy
sector . Planning for the sector was also moved from the
But Eskom faces significant challenges. After many years Department of State Enterprises to the Department of
of over-capacity and selling electricity below the long term Energy and is now undertaken through a process known
costs of supplying it, Eskom found itself in the mid-2000s as the Integrated Resource Plan (IRP). Nonetheless,
with a shortage of capacity. As a result, the country was electricity regulation, governance and policy formation
plunged into a series of rolling black-outs, starting from remain somewhat haphazard and uncoordinated.
2006 and returning intermittently until 2019. The capacity
shortage resulted in the decision to build two mega coal- White Paper on Renewable Energy 2003
fired power stations, Medupi in the Waterberg and Kusile in This White Paper aimed to develop sustainable, renewable
Mpumalanga. In addition, Eskom now faces the issue of an energy supplies to rural communities and entities far from
ageing plant that is unreliable, more expensive to run and the national grid. The policy also focuses on supplying
in need of replacement. energy for rural water supply and solar water heating for
households and businesses, both urban and rural. It sees
The Constitution requires the government to establish a that large-scale utilisation of renewable energy will reduce
national energy policy to ensure that energy resources are carbon dioxide emissions and benefit the environment.
adequately managed and developed to cater for the needs
32
Renewable energy has a significant role in promoting However, an energy system based on renewables offers
integrated sustainable rural development and in improving significant comparative advantages. Even without such
the quality of life of rural communities. Decentralised mini advantages, other countries are already investing in
grids with hybrid systems are already running at two pilot renewable energy, which is now cheaper than legacy fossil
sites in the eastern Cape (at Lucingweni and the Hluleka fuel-based systems. Should South Africa fail to exploit its
Nature Reserve). comparative advantages, it risks falling behind the rest of
the world and becoming a high-cost energy jurisdiction.
National Development Plan
According to the objectives of the NDP, by 2030 South 4.2 RATIONALE FOR SUPPORTING THE ADOPTION OF
Africa should have an energy sector that drives economic 4IR TECHNOLOGIES
growth with an adequate supply of electricity, with at least 4.2.1 Potential applications and impacts
95% of the population having access to the grid or to off- Eskom is currently configured so that its power is mostly
grid electricity. By 2018, 90% of South Africans had access generated from very large, remote, coal-fired power
to power and 80% of rural areas had been electrified stations and fed into a single national grid. The resulting
through the integrated national electrification programme. long-distance transmission grid leads to power losses,
which are most severe during peak periods when there is
The biggest challenge, therefore, is not the greater competition for access to power on the grid.
electrification rate but instead ensuring a constant
and sustainable power supply. However, the renewable The distributed, digital transaction ledger technology
energy targets of the NDP – that wind, solar and hydro- of Blockchain, which underpins controversial
electricity should also make up at least 20,000 MW of the cryptocurrencies such as Bitcoin, also has potential
additional 29,000 MW of additional capacity – are far from applications in the area of energy supply and trading,
being achieved. By 2018, renewable energy contributed permitting transparent supply chain management and
only 8.8% towards the total domestic electricity generation the introduction of smart contracts. In the transition to a
capacity of 51,309 MW. Despite modest economic growth more decentralised, digitalised and decarbonised world,
over the last ten years, the shift from energy-intensive Blockchain might further enable automated bill payments
sectors towards services means that South Africa now and the sharing of transferable renewable energy
consumes less electricity than it did a decade ago. credits. Blockchain could also offer a smart transaction
platform where households could also become producers
Mismanagement, ‘state capture’ and corruption, along and sellers of energy with a high degree of autonomy,
with ongoing dependence on ageing coal plants, mean that increasing efficiency by balancing supply and demand in
the current South African electricity supply system is no real time. There are a number of smaller companies around
longer sustainable as it is. Accordingly, the presidential the world focusing on peer-to-peer energy trading, but the
task team set up to address the inconsistent power supply field is still new and difficult to manage. Blockchain might
has recommended, inter alia, the break-up of Eskom into facilitate peer-to-peer trading. The potential for South
smaller units (generation, transmission and distribution) Africa really lies in investment in the smart grid (Blockchain
and the deregulation of electricity distribution, allowing and AI) and, in the context of advanced renewables, as a
for localised microgrids. More controversially, the task way to streamline the different power production inputs
team recommends reducing the role of coal in South and re-distribute them in a more efficient way via the
Africa’s energy mix, and the gradual closure of coal-fired integration of technology.
power plants over the next 30 years. Although in line with
the draft Integrated Resource Plan, this will require huge The technical architecture of Blockchain is, however,
political will and plans to mitigate against job losses. extremely energy intensive. To overcome this problem,
energy Blockchains eschew the proof-of-work processes

involved in Bitcoin mining and use something less secure local communities, schools and businesses. By doing so,
called ‘proof-of-stake’. However, sharing sensitive financial local communities can benefit from clean and affordable
and transactional data via Blockchain falls foul of General electricity while investors are ensuring long term power
Data Protection Regulation (GDPR) rules. Nevertheless, supply and generating income through the solar panel
if this can be overcome, Blockchain solutions might allow lifespan, which is usually twenty years. All transactions can
more energy trading in deregulated markets such as use national currency or Bitcoin payment. Allowing the use
some of those in the USA, Australia and parts of Europe. of Bitcoin payment is especially crucial for international
In South Africa, the use of Blockchain will require changes investors as it provides a way to simplify international
to regulation for both peer-to-peer trading and the use of monetary operations. Currently, Sun Exchange has funded
Blockchain itself. two projects, which includes an 18kw rooftop solar plant
in Cape Town for a non-profit organisation and a 60kw
The Sun Exchange is a South African start-up company that system for an elephant park in Knysna.
works like a crowdfunding platform for small- to medium-
scale solar projects in developing countries. It acts as the 4.2.2 Current use cases and level of technology take-up
middleman between local communities and investors. The South Africa’s Renewable Energy Programme. In 2010,
focus of the start-up is to identify areas with significant South Africa commenced a renewable energy programme.
potential for solar panel systems. These modules are This initiative - the Renewable Energy Independent Power
then sold to private investors who in turn can lease to Producer Procurement Programme (REIPPPP) - arises
table 02
South Africa energy projects by main technology
BW1 BW2 BW3 BW4 BW5 TOTAL
capacity in number capacity in number capacity in number capacity in number capacity in number capacity in number
Projects MW of projects MW of projects MW of projects MW of projects MW of projects MW of projects
Onshore
649 8 559 7 787 7 - - 1 362 12 3 357 34
Wind
Solar PV 627 18 417 9 - - - - 813 12 2 292 45
Solar CSP 150 2 50 1 - - 200 2 - - 600 7
Landfill
- - - - 18 1 - - - - 18 1
Gas
Biomass - - - - 17 1 - - - - 42 2
Small
- - 14 2 - - 5 1 19 3
Hydro
1425 28 1040 19 1457 17 200 2 2205 26 6327 92
SOURCE
WEF Global IT Report, 2016
34
from commitments made under World Bank funding of the and economies of scale. Larger operators, often foreign
Medupi power station. Procurement of generating capacity utilities or specialist developers with access to funding on
for REIPPPP is done through Eskom and it is managed via concessionary terms or investors with patient capital, are
the IPP Office under the Department of Energy. Since beginning to dominate. The breakdown of projects by main
November 2011, more than 6,327 MW from 92 renewable technology is as in Table 2.
energy projects has been awarded in projects covering
solar PV, onshore wind, biomass, small hydro, Concentrated As is evident from Table 3, the fully indexed average price
Solar Power ( CSP) and landfill gas. This represents a total (Rand/kWh) reflected in the Power Purchase Agreement
investment of R192 billion, over a quarter of which is with Eskom has fallen at each bidding round. The
foreign direct investment. Many of the projects are already cumulative effect is dramatic.
in commercial operation, contributing about 1,827 MW to
the generation mix. Beyond the significant cost savings offered by REIPPPP, the
shortened lead time from build to commercial operation
As the REIPPPP has matured, project funding and is significant. Renewables are now the cheapest new build
ownership structures have also changed through better energy option.
understanding of project risk, increasing competition
table 03
index average price in the Power Purchase Agreement
BW1 BW2 BW3 BW4 BW5
Onshore wind 1.36 1.07 0.78 - 0.68
Reduction from previous round - 21.3% 27.1% - 12.8%
Total decline from BW1 - - - - 50%
Solar 3.39 1.96 1.05 - 0.82
PV reduction from previous round - 42.18% 46.43% - 21.9%
Total decline from BW1 - - - - 75.8%
CSP 3.2 3 1.74 1.62 -
Reduction from previous round - 6.25% 42.0% 6.9% -
Total decline from BW1 - - - 49.38% -

Most renewable energy development takes place in One area requiring urgent attention is in regulation, system
defined Renewable Energy Development Zones (REDZs), governance and the institutions that should be facilitating
which are geographical areas where wind and solar the energy transition. These are simply not fit for purpose,
development will have the lowest medium- to long-term as can be seen from the delays at the NERSA to license
impact on the environment while yielding the best social privately-funded facilities of less than 10 MW, and its
and economic benefit. inability to issue regulations for permits for embedded
generators of less than 1 MW.
In 2016, the REIPPPP became stalled, with Eskom
refusing to sign new Power Purchase Agreements on the
grounds that renewables are too expensive and that it
had sufficient generating capacity itself. Under incoming
President Ramaphosa, however, the final rounds of bids
were assigned to contractors. There are some tentative
efforts to restart the programme.
Both the current transmission grid and the distribution

grids need significant upgrading, the latter more seriously
so, particularly in order to deploy Internet of Things (IoT)
technologies along with smart (time of use (ToU)) metering
and to allow disaggregation of charges from the standard
set kWh rate into their various components. Widespread
deployment of variable energy sources requires that these
cost elements be unbundled and charged separately.
Furthermore, smart renewables-friendly grids allow for
better management of supply and demand and offer
an intelligent electricity network that can integrate the
actions of generators, users and consumers to deliver an
efficient and secure electricity supply.
4.3 Drivers and challenges specific to energy

Although South Africa’s electricity system, operated as
it has been by a vertically integrated monopoly, has not
encouraged the development of the requisite skills, the
electricity system itself is relatively large. As such, there are
many opportunities to repurpose existing skills and to draw
in skills from other sectors such as finance, IT, telecoms
and construction. The REIPPPP experience shows that
South Africa is capable of delivering large projects within
budget and on time and that it is possible to adapt existing
infrastructure to accommodate more renewables. The real
work lies in the distribution networks and there is already
significant progress in beginning to adapt distribution
networks for more renewable energy.
36
4
industrialisation
Manufacturing is South Africa’s fourth largest industry,

contributing 14% to Gross Domestic Product (GDP) and
employing about 1.2 million people. Growth within
the manufacturing sector has created high-income jobs,
upstream relations to local businesses and multiplier
effects throughout the economy for both formal
and informal workers.

figure C

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5.1 PRESENTATION country’s capacity to produce manufactured goods,
For the purpose of the paper, the main focus under undermining efforts to build and sustaining a successful
industrialisation is manufacturing, which comprises manufacturing base, increase manufactured exports or
various sub-sectors, as highlighted below. Manufacturing expand employment.
is South Africa’s fourth largest industry, contributing 14%
to Gross Domestic Product (GDP) and employing about 1.2 Thirdly, South Africa is a more open economy with greater
million people. Growth within the manufacturing sector international trade driven by the import of manufactured
has created high-income jobs, upstream relations to local goods. The situation for the manufacturing sector has
businesses and multiplier effects throughout the economy been made more difficult given the lack of skills due to the
for both formal and informal workers. The growth in the ‘brain drain’. Furthermore, the advent of Machine Learning,
manufacturing sector correlates with the growth in the automation and robotics has created redundancies in
manufacturing production index (which shows the number human capital intensive industries such as textiles and
of total value-added in the manufacturing production mining, negatively impacting on the number of people
sector only) of South Africa has been increasing up to employed in the industry114.
about 141.9 in 2006 from about 100 in the year 2000.
The 2017 National Industrial Policy Framework (NIPF)
Food and beverages are the most important sub-sector, aims to provide an overarching framework and rationale
contributing 25% to manufacturing. Other key contributing for supporting industrial growth in order to develop
sectors include petroleum and chemicals (24%), iron and and roll out an Industrial Policy Action Plan (IPAP). With
steel (19%), wood products, paper and printing (11%), its strong focus on the manufacturing sector as a key
motor vehicles, parts and accessories (7%), textiles driver of balanced development, the IPAP sets out to
and clothing (7%). address cross-cutting and sector-specific constraints
to boost South Africa’s economic growth and attempts
In the mid-1990s, industry contributed around 20% to to support investments in productive capacity, skills
South Africa’s GDP. But greater international trade has seen and increased local manufacturing capabilities for
the ratio of imported goods over locally imported goods export-led industrialisation .
rise from 54% in 2010 to 61.9% in 2018). In addition,
incentives extended to other sectors have seen their The Department of Trade and Investment (DTI), which leads
contribution to GDP grow. Furthermore, the manufacturing South Africa’s industrialisation agenda , recently launched
sector’s growth has been near zero over the last 20 years, a revised version of IPAP, the objectives of which include:
with the volume of goods produced increasing by less than
1.5% per year and the value of goods produced flatlining . • economic transformation to re-structure and diversify
the economy with a focus on manufacturing;
These trends are likely to continue, underpinned by several • a developmental model focused on radical economic
factors. Firstly, companies are not investing in new plants transformation and social inclusion;
and factories due to restrictive laws and union rigidity; • sustainable job creation by focusing on labour-
power supply constraints in recent years, and the cost of intensive industries and promoting the integration
electricity; and political instability, including the possibility of primary manufacturing and service value chains
of land expropriation. across industries and sectors;
• emphasis on R&D and movement towards
Secondly, South Africa’s manufacturing capital stock a knowledge economy;
has declined by some 17% since 2008 to reach R561 • private-public partnerships to address the challenges
billion (having grown by 26% in the preceding 15 associated with digitalised production and logistics
years) . This means that there has been a decline in the related to 4IR; and

• contribution to regional (SADC and Africa) In the mining sector, robotics can also increase cost
industrial development. efficiency, improve safety and reduce the environmental
impact in mines. The high incidence of mining fatalities
However, despite these policies supporting the caused by rock falls could be reduced by the deployment of
industrialisation of South Africa, manufacturing and robotic technologies to access areas that are inaccessible
industrial development has not yielded the intended to humans in case of an incident. Robots equipped with
macroeconomic impact. sensors to identify hazardous gases can be sent ahead of
miners, thereby increasing safety in mines. Task-specific
5.2 RATIONALE FOR SUPPORTING THE ADOPTION autonomous mobile robots used in mining extraction
OF 4IR TECHNOLOGIES can help mines to achieve cost efficiency and workplace
5.2.1 Potential applications and impacts safety by automating heavy vehicles used in mining
One research report claims that the adoption of Artificial extraction. Robots may reduce expenses related to water
Intelligence (AI) can boost South Africa’s manufacturing and electricity consumption needed for cooling mining
gross value-added growth rate by 1.4 percentage points chambers before miners can enter the underground
by 2035. There are opposing views on the impact of 4IR shafts, resulting in a substantial impact on mines’ bottom
technologies such as robotics. On the one hand, they may line and profits.
help by increasing productivity and competitiveness in
global value chains; but on the other there is likely to be Business Process Outsourcing (BPO) and IT-enabled
employment disruption – job losses, the disruption of job services (ITES) also benefit from 4IR technologies. BPOs
roles, requiring new forms of work and updated skills for (popularly known as call centres) have found a new lease
the workforce. of life within the 4IR environment, with migration from the
more transactional voice channels to new platforms such
4IR technologies in the manufacturing sector enable as webchat, app servicing etc.
factories to become integrated, intelligent, adaptable
and efficient. South Africa is moving towards leveraging Business Process Enabling South Africa (BPESA) operates
smart technologies to move towards automation and both as a specialist investment promotion agency for
advanced manufacturing. For example, predictive the BPO industry and as a national trade association and
maintenance involving the use of AI algorithms can aid networking body. From having been a weak competitor
planning and reduce unplanned downtime, thereby saving in BPO and IT-enabled services (ITES) a decade and a
costs. AI algorithms are also used to identify production half ago - due mainly to the high cost of international
faults that may impact on product quality. Human-robot bandwidth and labour - South Africa is now highly ranked
collaboration will lead to increased efficiencies and as an offshore destination category, providing high quality
safety as more robots enter the production line and work services at competitive prices and is able to compete with
alongside humans. Furthermore, AI can assist in product India and the Philippines.
design processes and supply chain administration such as
changes in demand and supply patterns143. 5.2.2 current use cases and level of technology update
South Africa ranks favourably and ahead of India, Brazil and
4IR technologies applications have a particular impact Russia in terms of digital competitiveness under several
on South Africa’s automotive industry. Robots enable critical criteria including technology skills, access to
higher production, improved efficiency and safety in the capital, existing innovation ecosystems, R&D expenditure
automotive industry. Furthermore, the use of specialised and regulatory frameworks162. South Africa also leads
robots with advanced sensory capabilities improves in terms of ICT exports and digital knowledge, putting
efficiency, increases production and improves the quality the country in a favourable position for industrialisation.
of products. However, this relatively stronger digital position has not
40
translated into higher economic and industrial growth 320 new robots with advanced sensory capabilities at their
as expected. Uitenhage factory. These robots perform high precision
tasks while shop floor workers have been redeployed
In manufacturing to focus on tasks that require human involvement. The
There are, however, positive examples. For instance, introduction of the robots has increased efficiency and
DataProphet, a start-up company, supplies an Artificial reduced strain on Volkswagen employees. Furthermore,
Intelligence (AI) programme to improve efficiency the technology enables the production of more than one
in manufacturing plants by collecting data from all model in a single assembly line.
measurable dimensions of a manufacturing process and
then uses Machine Learning to predict anomalies, quality 5.3 DRIVERS AND CHALLENGES SPECIFIC
errors and areas where operations can be improved. TO INDUSTRIALISATION
The 4IR presents an opportunity for industrial
In 2018, ABB, a European multinational corporation, development in South Africa but comes at some risk. It is
introduced a collaborative robot into the South African expected to disrupt work in some areas of industry through
manufacturing sector, which can be quickly and easily automation, particularly where semi-skilled labour is
installed on the production line to work with a human deployed. Automation is not new and has been leading to
colleague. Omron, a Japanese provider of industrial redundancies in the automotive industry for some time.
automation, has pioneered the introduction of motion With Machine Learning and AI this may intensify and move to
control using AI, enabling a machine automation higher level skills although there is evidence that job losses
controller to monitor the production process and can be managed through reskilling. The World Economic
intervene accordingly. Forum (WEF) suggests that very low-level manual jobs are
unlikely to be replaced and that AI and robotics are not able
3D printing technology has been used to enable additive to simulate creative areas of work for those requiring ‘soft
manufacturing, which is used to manufacture high-tech skills’ or emotional engagement. Countries that are unable
specialised parts such as biomedical prosthetic hip joints. to keep abreast of rapid technological advancement
and innovation may also become less competitive in
In mining increasingly globalised markets. Working with a number
There are also a number of examples of AI support for of other agencies and industrial research centres, the DTI
mining. For example, in 2016, General Electric launched has already begun implementing strategies to improve
its first Africa Innovation Centre (AIC) in Johannesburg preparedness. To avoid the disruption by the 4IR in the
with the aim of incubating sustainable local innovation manufacturing sector, the following key enablers need to
for Sub-Saharan Africa. The AIC participated in a pilot be put in place.
programme for a mining equipment manufacturer to
deliver a remote monitoring software platform that enables A well-established manufacturing sector. The World
remote monitoring of equipment allowing for proactive Economic Forum has commissioned a framework study to
maintenance. In 2016, Kumba Iron Ore introduced measure the readiness of countries for future production
automated drills, which are expected to reduce drilling technology and processes. To this end, countries are
costs by 15%, at its Kolomela mine in the northern Cape. positioned with regard to four categories or archetypes.
Rather than laying off the drill operators, the company These are:
retrained them to operate automated drills remotely,
resulting in greater efficiency and improved safety. • Global Leaders – countries with a strong current
manufacturing base, well-positioned for the future;
In automotive • Legacy Champions – countries with a strong current
Here too, examples abound. In 2016, Volkswagen installed manufacturing base but at risk for the future;

• Followers – countries with a limited current Research & Development for Innovation
manufacturing base that are unprepared for 4IR and Innovation has become increasingly important to enable
are at risk for the future; industrial companies to gain a competitive advantage.
• High Potentials – countries with a limited current Furthermore, companies will need to balance investment
manufacturing base but that are well-positioned for and resource allocation between these in order to translate
the future. innovation into business growth. A key issue that South
Africa faces is limited platforms for commercialisation
South Africa can be classified as a ‘Follower’, but with of local innovations. This has created a trend where
industrialised and third world economies existing side local innovations are commercialised abroad before
by side, the country lies close to the intersection of all being reimported.
four categories. South Africa could therefore slip back or
advance into any one of the other three categories. It has In response to this trend, the DTI is working with industry
a well-established and diversified manufacturing sector, and the DST to commercialise a larger proportion of local
supported by a well-developed infrastructure, and is innovations. For instance, the DTI and CSIR have jointly
positioned close to other rapidly-growing African markets. developed the National Industrialisation Support Initiative
However, its weaknesses include rising costs of production, to provide a product lifecycle support platform; the DTI has
skill shortages, ongoing job losses and uncertainty about also set up government-sponsored Mining, Manufacturing
government policy. To position the manufacturing sector and Sustainable Development Hubs as innovation hubs for
for the 4IR, the focus must be on leveraging its strengths to the mining and manufacturing sectors143.
prepare for emerging technologies143.
Regulations
Skills There is a need to develop a smart set of regulations that
The manufacturing sector in South Africa needs the address the challenges related to the 4IR. A key example
requisite skilled personnel to work with advanced and of this is the Patriot Corporation Incentive being set up
emerging 4IR technologies143. At present, the poor by the DTI to encourage companies to establish their
education system and lack of skills development means headquarters in South Africa on a voluntary basis and
that there is limited availability of skilled labour in the to produce a significant proportion of their goods and
manufacturing sector. South Africa will need to rectify services locally. Benefits under this incentive scheme will
this in order to mitigate future job losses caused by 4IR be givenn for products linked to 4IR, including localisation
technologies and to have an adequate skills pool to leverage of activities in the fields of AI, robotics and Machine
advances that come with the 4IR in manufacturing 143
. Learning143. Expanding such incentives to companies in
the manufacturing segment would encourage availability
Enabling Infrastructure and/or adoption of 4IR technologies and processes
Key enabling infrastructure for the manufacturing sector for manufacturing.
in the 4IR includes digital infrastructure and services, and
reliable electricity143. The effectiveness of the IoT relies
on pervasive, high speed, stable bandwidth, and most
other advanced technologies such as robotics and data
analytics equally rely on ‘always on’ connectivity. South
Africa’s critical communications and electricity inputs are
inefficient and costly, which could hamper the take-up
and impact of advanced technologies and processes in the
manufacturing sector.
42
6
regional integration
For the purpose of the paper, the main focus under

industrialisation is manufacturing, which comprises various
sub-sectors, as highlighted in this chapter.
figure D

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6.1 PRESENTATION strategies and policies of the institution) and strategic
Industrial growth in the Southern African Development priorities set out in the SADC Treaty of 1992 (the founding
Community (SADC) is low and lacking in diversification, agreement of the SADC).
with countries in the region relying on a few commodity
exports. Key bottlenecks in trade facilitation that have an The main objective of the RISDP is to increase regional
impact on industrial development within the SADC include integration with the aim of: i) alleviating poverty and
inadequate infrastructure, slow customs procedures and inequality and underserved areas; ii) achieving sustained
weak logistical systems. These could undermine industrial economic growth and development supported by regional
development. integration to increase market size, improve intra-regional
trade, investment flows and increase transfer of investment
Regional integration in the SADC consists of internal trade flows; iii) other related priorities including diversifying SADC
between SADC countries, which is dominated by South economies and increasing the participation of member
Africa, and trade between SADC member states and other states in the regional value chains and non-economic
parts of the world, which is dominant in the SADC region. development goals such as maintaining the peaceful
Over the years, the SADC has succeeded in opening up status quo in the region by ensuring good governance,
several international markets for exports originating from regular elections, peace and stability.
the region, for example, through the 2016 Economic
Partnership Agreement, which opened European markets The SADC identified 12 priority sectors for intervention
for SADC exports, albeit at the cost of intra-regional trade. to achieve regional integration. These include poverty
Despite several initiatives to advance intra trade, this eradication; combating the HIV and AIDS pandemic;
has not increased significantly. Intra trade has increased gender equality and development; science and
slightly since the SADC Free Trade Agreement was technology; information and communication technologies;
launched in 2008. Regional intra trade stood between environment and sustainable development; private sector;
10% and 17%147 in the SADC, compared to 24% in the and statistics. Sectoral cooperation and integration focuses
Association of Southeast Asian Nations (ASEAN) and 40% on trade and economic liberalisation and development;
in the European region. Low intra trade in the SADC is due infrastructure support for regional integration and poverty
to tariff and non-tariff barriers, underdeveloped trade- eradication; sustainable food security; and human and
related infrastructure, weak manufacturing capacity and social development.
poor implementation of trade agreements.
To achieve the RISDP goal of deeper integration of the
Some interventions to bolster intra-SADC trade include the SADC, integration milestones have been defined to help
establishment of the SADC Customs Union, the SADC Free the SADC and its partners to measure the progress that is
Trade Area and the SADC Common Market. Furthermore, being made towards the integration agenda of the SADC.
the SADC has earmarked the development of regional These include the following:
value chains (in which member states will trade in various
products or services that are at various stages of the value • a Free Trade Area formulated to support intra-regional
chain)146. trade, which was achieved in August 2008 following
a phased programme of tariff reductions since 2001,
The Regional Indicative Strategic Development Plan when 85% of intra-regional partner states achieved
(RISDP) is a development and implementation framework zero duty;
guiding the regional integration agenda of the SADC over a • a Customs Union, where members agree on common
period of 15 years (2005-2020). It is designed to provide external tariffs and common trade policies. An SADC-
strategic direction to SADC programmes, projects and wide Customs Union (a pre-existing customs union
activities in line with the SADC Common Agenda (the key brings together Botswana, Lesotho, Namibia, South

Africa and Eswatini, outside the SADC) has been A coordinated approach to tax policies is expected to
repeatedly delayed and postponed. Its failure affects facilitate trade throughout the region and coordinated
the achievement of the other SADC integration tax incentives have the potential to encourage
milestones; foreign investment.
• a Common Market, where countries agree to remove
all trade barriers between themselves, establishing Although much progresses has been made in the SADC
common tariff and non-tariff barriers for importers, with regard to deepening integration, SADC member
allowing the free movement of labour, capital and states are at different stages of economic, political and
services amongst the countries. The SADC has not social development, which inhibit member countries
achieved a Customs Union, which is a pre-requisite for from adopting common priorities and common models
a Common Market; or frameworks.
• a Monetary Union, where countries achieve
macroeconomic convergence, with stable and In the regional integration context, the vital task is to
harmonised exchange rate systems, liberalise increase trade within the region. To facilitate this, greater
capital and current account transactions and adopt harmonisation of regulations to facilitate the cross-
market-oriented approaches to monetary policy. This border flow of data and digital transformation processes
milestone is unlikely to be achieved in the absence of are necessary. The internet enables businesses and
the achievement of the aforementioned milestones. governments to participate in regional trade and this is
• an Economic Union, the final step in deepening regional more important for small businesses as it has the potential
integration resulting under a single currency. To date, to drive inclusion. A region that is digitally connected can
the SADC has achieved political union and is unlikely to empower the small and medium enterprises (SMEs) which
achieve an Economic Union if the other milestones are are considered to be the backbone of the southern African
not achieved. economy and the broader continent. In other regions, for
instance the ASEAN region, between 89% and 99% of
In terms of more recent redevelopments, if the SADC wants enterprises are SMEs and they provide between 52% and
to take full advantage of the 4th Industrial Revolution, its 97% of employment in member states and are seen as a
policies have to improve to fall in line with global trends on vital source of innovation.
digitalisation. The SADC’s regional priorities to unlock the
4th Industrial Revolution are related to digital infrastructure The implementation of policy to simplify regional business
and connectivity, affordability, skills and awareness, is necessary if the SADC region as a whole, including South
entrepreneurial development and local content. Africa, wants to pursue regionalisation as a strategy to
reduce poverty, develop digital skills for both learners and
6.2 RATIONALE FOR SUPPORTING THE ADOPTION OF teachers and encourage and empower the participation
4IR TECHNOLOGIES of small businesses in the wider digital economy. Lastly, in
6.2.1 Potential applications and impacts order for the SADC region to harness the benefits of the
The SADC has considerably grown its internal regional 4th Industrial Revolution, it is necessary to improve cross-
market by deepening the integration of its policies and border as well as internal infrastructure development, not
regulations, specifically in the e-commerce, e-transaction, only digital. A regional market would also ultimately benefit
data protection and cybersecurity sectors. More the agriculture and manufacturing sector, which would
compatible and harmonised digital policy and regulatory extensively benefit from an increase in regional trade.
frameworks, especially in the domain of data protection
and cybersecurity, backed up by improved access to ICT, The role of the SADC in this context is to ensure that the right
are increasing customer confidence in e-commerce and coordination and harmonisation mechanisms are in place
e-transactions and therefore boosting regional trade in to digitalise the economy and to increase trade flows across
both goods and services.
46
borders. In the context of the 4th Industrial Revolution, the Huawei is working with local South African partners to
business case for regional integration would be to design build data centres in Johannesburg initially and later in
and implement more effective and efficient trade rules Cape Town. The Chinese telecommunications equipment
and customs, such as the development of paperless trade and consumer electronics manufacturer, which is currently
systems161. Digitalisation of cross-border transactions at the centre of global security concerns, is looking to
can also enable transparency in trade processes by challenge Amazon.com Inc, which, through Amazon Web
enabling information on existing laws, regulations and Services (AWS), a global leader in cloud computing, is
procedures to be shared on online platforms. also expanding its presence in the emerging technology
hub of Cape Town in a market share race against cloud
This will require the SADC region to amend their policies to computing rival Microsoft Corp. In the last quarter of 2018,
adopt common international standards on data protection; AWS’s revenue grew by 46% to $7 billion while Microsoft’s
to complete the harmonisation of legal frameworks on revenues grew by 76% to $4 billion to remain in second
financial services, e-commerce and e-transactions and place. In order to secure its position in the South African
taxation; to improve digital infrastructure and increase market and in response to data localisation pressures,
skills; to increase public, private and civil society sector Microsoft has located its latest Africa data warehouses in
co-operation; to ensure that there is an intergovernmental Cape Town and Johannesburg. Similarly, other large data
coordination mechanism161. centres in the country are Teraco and Standard Bank.
6.2.2 current use cases and level of technology take-up 6.3 DRIVERS AND CHALLENGES TO
Most countries in the southern Africa region, aside REGIONAL INTEGRATION
from South Africa, have grown rapidly in the last two Industrial development is at the core of SADC’s regional
decades. Overall, high growth rates experienced in the integration and economic development narrative. There
SADC proceeded alongside an increase in trade between have been ongoing conversations around the need for
countries, led by exports from South Africa to the rest of the SADC to embrace the 4IR and its disruptive effect
the neighbouring countries. The growth of trade has been on economies. Most of the discussions revolve around
fostered by the realisation of an SADC free trade area (FTA) identifying policy changes and initiatives that the SADC
and the successful implementation of tariff reductions must consider in relation to the 4IR.
agreed upon within the 2005 SADC Protocol on Trade.
The SADC’s industrial policy development framework
The growth of regional trade in goods has been needs to include a new dimension – an SADC Co-operation
accompanied by a rapid growth of regional trade in Framework on Digital Industrialisation – to collectively
services alongside significant foreign direct investment face common challenges to the region from disruptive
(FDI) in SADC, notably by South African firms, in sectors technologies and increased competition. This framework
such as banking, insurance, transport, retail and business proposes a five-step approached that entails: i) building a
support services. To date, regional trade and investment data economy; ii) strengthening broadband infrastructure
flows have largely originated in South Africa. This is not in the region; iii) adopting similar regulations at the national
surprising given the historical competitive advantage of level on consumer protection, cybersecurity and tackling
South African firms, which allowed them to grow relatively unjustified geo-blocking; iv) Building the capacities of
large in size and increase their capabilities. Small Medium Enterprises (SMEs) and preparing them
for digitalisation; v) Building trade statistics for designing
In the innovation and high-tech sector, South Africa is digital industrial policies.
becoming the battleground for a number of multinational
platforms, which are establishing their data centres in Skills development and Public-Private Partnerships
South Africa as a strategy to grow their regional market. (PPPs). A recent gathering of SADC Ministers of Education

& Training, Science, Technology and Innovation reviewed on innovation ecosystems and assisting entrepreneurs in
progress and implementation of ongoing programmes the SADC region. During the first phase, which ran from
and initiatives in these sectors, particularly in relation to 2011 until 2015, the SAIS programme stimulated policy
the regions agenda around the 4IR. The consensus was design in the innovation domain, provided training, created
that the development of digital skills for both learners and networks and funded projects that piloted new models
teachers is paramount and Public-Private Partnerships are for innovation support mechanisms. In the second phase,
needed to drive change and innovation required for the which started in 2017 and will provide funding until 2021,
4IR. However, lack of funding could hamper these efforts. the programme is providing new opportunities to students,
In 2018 the SADC approved the establishment of the SADC technologists, start-ups and citizens to participate in
University of Transformation to train citizens in innovation employment and value creation not only in the SADC
to facilitate industrialisation in the region. It is not yet clear region but globally. The private sector and non-state
when the university will become operational. actors, including special interest groups such as SMEs,
women in business and young entrepreneurs, are playing
The role of start-ups. Start-ups are vital to ensure that the a growing role in the programme as drivers for innovation
SADC is part of the 4IR. The technology start-up space drives in southern Africa.
the growth of homegrown starts-ups using innovation
solutions to solve problems in the region. A key obstacle is The SAIS programme has also established a network of hubs
the lack of funding in this space. SADC governments need which include the BongoHive, the Botswana Innovation
to create favourable environments for investment and to Hub, BuniHub, the Commission on Science and Technology
be more involved in local start-up ecosystems. (COSTECH), Dololo Namibia, Injini, MashUp, mHub, mLab
Southern Africa, the Namibia Business Innovation Institute
SADC countries recognise the importance of a vibrant (NBII),the National Commission on Research Science and
start-up sector as evidenced by the implementation Technology (NCRST), the National Technology Business
of several support initiatives such as the Angola Invest Centre (NTBC), NestHubs, the Slush Global Impact
initiative, Malawi’s Youth Entrepreneurship Development Accelerator (GIA), the South Africa Innovation Summit,
Fund, Namibia’s SMEs Compete, and Botswana’s Citizen the Southern Africa Startup Awards, OneBio, Technology
Entrepreneurial Development Agency Young Farmers’ Innovation Agency (TIA) and WECREATE Zambia.
Fund. However, although underpinned by good intentions,
these interventions have produced uneven results and the As part of the South Africa Innovation Summit, a TechTribe
start-up ecosystem in the region remains suboptimal. Accelerator (TTA) has been established as an acceleration
platform to leverage an e-learning system and virtual
More recently, several government organisations and the mentorship to support high-tech impact ventures across
SADC have established the Southern Africa Innovation the SADC region to become investment ready, to access
Support Programme (SAIS 2), a regional initiative that capital and to access new networks. This SADC virtual
supports the growth of start-ups by strengthening accelerator programme will be implemented in four SADC
innovation ecosystems and by promoting cross-border countries aligned to the Southern African Innovation
collaboration between innovative private players in Summit, the NEPAD SANBio nodes and the Malawi mHub.
southern Africa. SAIS 2 is supported by the Ministry An e-learning platform will be available to innovation hubs,
for Foreign Affairs (MFA) of Finland in partnership with universities and accelerators in the SADC region, to run
the Ministries responsible for Science, Technology and their own programmes with the support of NEPAD SANBio
Innovation of Botswana, Namibia, South Africa, Tanzania and the Malawi Innovation Hub.
and Zambia, and the Southern African Development
Community (SADC) Secretariat. The fund aims at Harmonisation of legislation, policies and regulations.
supporting early stage entrepreneurship through training The SADC process towards regional harmonisation of ICT
48
policy and regulation is part of the African Commission Investment focuses on harmonising the financial and
(AC) effort to support harmonisation efforts via such investment policies of SADC member states to develop
frameworks at a continental level. An African Union (AU) banking, financial regulation and investment. To date,
Reference Framework was adopted and endorsed in most of the financial reforms in the SADC have focused
2008. Subsequently, during the AU assembly in 2010, on creating a functioning banking sector by liberalising
the commitment to intensify activities to implement the the financial sector, by removing the official management
Reference Framework was renewed and implemented of interest rates and by simplifying access to banking
through the ITU/European Commission project on the services. Nevertheless, access to credit and capacity for
Harmonisation of the ICT Policies in Sub-Sahara Africa small or informal businesses remain a concern and current
(HIPSSA). The first activity launched by HIPSSA and the reforms have failed to address that large economic sector.
SADC Secretariat was the review and update of the SADC
ICT Policy and Legal Framework. In addition, three non-
binding Model Laws for SADC Members were developed:
1) the SADC Model Law on Data Protection; 2) the SADC
Model Law on Cybercrime; and 3) the SADC Model Law on
Electronic Transactions & Electronic Commerce.
Nevertheless, poor implementation of policies coupled

with a lack of political commitment is hampering efforts
towards harmonisation of policies. In particular, the SADC is
facing the following challenges to ICT policy and regulatory
harmonisation:
• existence of multiple ICT policy and programme

initiatives, some of which are often in competition with
each other;
• very little ownership of regional ICT policy and
regulatory initiatives by national African governments;
• few institutional mechanisms in place on the part
of regional organisations and institutions to ensure
compliance with model policies and frameworks or to
monitor and evaluate implementation;
• member states belonging to the SADC are sovereign
states with no obligation to adopt and adjust
national ICT policy and regulatory frameworks
according to policy guidelines or model laws issued by
regional bodies.
The SADC has also made progress in terms of strengthening

and harmonising financial systems to facilitate the
availability and movement of capital to support policies
that promote technology know-how, modernised
production systems as well as skills development, science
and technology. The 1996 Protocol on Finance and

7
wellbeing
7.1 PRESENTATION Efficiency in public services such as transport, healthcare,

Within the context of this paper, the term well-being energy, water, waste management, telecoms, housing or
describes how innovative technology of the 4IR can be general security can be achieved with the introduction
integrated into society to improve management and of technology.
governance of the environment and to implement systems
that lead to the sustainable use of natural resources as There is a need to accelerate investment and encourage
well as driving inclusive economies. For the purpose of this technology deployment for smarter urban infrastructure.
study, the main focus will be on financial inclusion but also Start-ups will play an essential role in developing such
on healthcare. technologies and they will require support from government
and the private sector to increase their scalability.
7.2 RATIONALE FOR SUPPORTING THE ADOPTION OF
4IR TECHNOLOGIES Financial inclusion
Digital connectivity and communication are creating a Financial inclusion refers to the ability of individuals and
substantial amount of data, which, in turn, is driving the business to access financial services to facilitate their
development of technologies like Artificial Intelligence, consumption and investment activities. It allows families to
data analytics and Machine Learning. Devices such as meet their consumption needs and to invest in their futures
drones, satellites, mobile phones, robots and sensors are through improved education and health programmes.
used to gather data in various forms and, when analysed, Financial inclusion is generally associated with economic
can enable people, businesses and governments to make and social development and plays a significant role in
data-driven and predictive analysis. reducing extreme poverty and inequalities. In past decades,
physical banking has been transformed by automation
The opportunities rely on the implementation of the right and by the introduction of electronic banking services.
technologies to bridge the gap by improving quality of life, South Africa was a world leader in the introduction and
employing new (and home-grown) technologies, building early extension of automated teller machine installations
smarter infrastructure and harnessing the dynamism of across the country in 1981 and also introduced phone
the informal sector123. banking and then internet banking services early on.
50
Research by Research ICT Africa shows that more than half There are many opportunities relating to the use of
of the South African population have access to financial Blockchain such as in improvements in transparency within
services, significantly more than the average 30% in the the public sector and constraining corruption, securing
other Africa countries surveyed. The deepening of financial land title deeds and transparency in value chains. However,
services can be attributed to the development of digitally it is clear that there are also substantial challenges. Besides
based products such as e-wallets, internet banking the fact that large numbers of people are offline, it would
platforms, Blockchain or crypto currencies and some other currently only have back end application with public and
new products. private systems. The capacity and cost of the massive
servers required for the mining of the data is beyond the
Blockchain technology application in finance and reach of most Africans, so they are mostly offshore. Their
e-administration energy requirements are currently even greater than their
Although there is no specific regulation yet in South Africa, bandwidth requirements, thereby also excluding many
there has been a positive response from regulators who African countries as locations for them.
are working with the FinTech and banking industries to
find the most effective and appropriate way to regulate Health
cryptocurrencies in South Africa. The treasury is studying There is a strong case for the adoption of 4IR technologies
the potential of distributed virtual currencies to streamline within the healthcare sector in South Africa and Africa. The
the South African Multiple Option Settlement system wheels are already in motion. These advances will address
through Project Khokha. The National Treasury’s Taxation a lack of resources across these regions and will make
Laws Amendment Bill 2018 proposed amendments to tax healthcare more accessible for people living in remote
legislation, including changing the way cryptocurrencies communities. High rates of infectious diseases (such as
are classified in South Africa. In December 2018, the HIV and TB) as well as the growing incidence of chronic
South African Reserve Bank published its review of the diseases (e.g. diabetes, cancer, cardiovascular disease)
National Payment Systems Act, number 78 of 1998, provide the opportunity for technology integration in the
for public comment. sector. However, barriers such as substandard telecoms
infrastructure will inhibit growth in the market. There are
The South African Reserve Bank (SARB) appears to also opportunities to manufacture equipment locally (good
recognise that there may soon be little difference between infrastructure and creation of jobs) although expertise is
domestic and international payments. Likewise, digital still lacking.
currencies could become part of the national payment
system in the future. This may end the exclusivity that The adoption of new technologies is always slower in Africa,
commercial banks have on processing payments with a particularly in the healthcare sector, as patient privacy and
digital South African fiat currency. safety is always at stake. We are seeing local healthcare
giants increasingly turn towards technology innovations to
drive operational efficiency and performance. For example,
In a significant step forward, the South African Reserve Netcare, South Africa’s leading private healthcare provider,
Bank, South African Revenue Service, National Treasury, invested R600 million to digitalise their entire operation
the Financial Sector Conduct Authority and the Financial so that patients can have access to their Electronic Health
Intelligence Centre created the intergovernmental FinTech Records (EHRs). This will also remove fragmentation
working group (IFWG), which released a consultation paper between service providers within Netcare’s various
on policy proposals for crypto assets in January 2019. The divisions and lead to improved treatment protocols. The
efforts by the IFWG aim to provide a platform for regulators project is expected to be completed in 2022.
and policy-makers to engage with industry and work
towards a harmonised approach to regulation and is a first
for the region.

figure E

intelligence

intelligence
52
There are also smaller local players who are leading the way, between the poor and the rich is significant in South Africa.
including a company called Kardio Group, which is part of Furthermore, the data shows that, while the digital gap
Brandmed, who have recently partnered with the pharma between genders is disappearing, it exists between
giant, Cipla. The company offers a comprehensive suite urban and rural dwellers, with about 40% of rural areas
of integrated digital solutions with the aim of managing not using the internet compared to only 25% of urban
NonCommunicable Diseases (NCDs). residents being unconnected. While the increased levels of
connectivity suggest that the digital divide is being bridged,
Furthermore, changes in policy and regulatory paradoxically, as more people are connected, digital
environments such as the National Health Insurance (NHI) inequality increases. This is not only the case between those
and Medical Schemes Amendments Bills and the results online and those offline, but between those who have the
of the Health Market Inquiry are expected to change the skills and financial resources to use the internet optimally
healthcare landscape radically. This will require robust and those barely online. Without policy interventions to
collaboration between the private and public sectors. reduce these disparities, offline inequalities will simply be
Patient-centric healthcare, where there is a high level of mirrored online or potentially amplified as the information
medical convenience, will become a priority for healthcare society matures and not everyone is equally well served
service providers. by ICTs.
7.3 Drivers and challenges specific to well-being With such digital inequalities, even if industry is ready to
Increasing connectivity reach is without a doubt the digitalise their processes and services to the citizens, this
foundation that bridges the digital divide between rural will only reach those that are connected. Services such
and urban areas. Connectivity will also allow a number of as e-government services, e-education, e-health, smart
new services to reach people in rural areas, such as digital metering for energy and water and smart lighting cannot
banking and remote healthcare, and improve the efficiency benefit those that have the greatest needs mainly due to
of service delivery such as power, water, transport and limited access to the internet.
logistics. Until proper implementation plans are in place
and until there is increased political will to digitalise Urbanisation
processes, South Africa may run the risk of falling behind in South Africa needs to be prepared for the urban explosion
terms of its efforts to create a digitalised economy. and is in a better position than many other countries
on the continent and requires an adequate vision from
Digital Inequality government and policy-makers and collaboration from the
Another critical issue is the digital divide. Although private sector. According to the World Economic Forum,
South Africa performs relatively well in terms of the African continent is experiencing a significant urban
African benchmarks, the survey findings indicate that infrastructure gap. The annual national public expenditure
technological forms of exclusion are a reality for significant on infrastructure was an average of 2% of GDP between
segments of the South African population and that, for 2009 and 2015, compared to 5.2% in India and 8.8% in
many people, digital exclusion reinforces and deepens China. Also, African urban areas are likely to suffer from
existing inequalities. Furthermore, ICT deprivation can climate change as the region as a whole is warming up 1.5
be considered alongside and strongly linked to more times faster than the global average. The strain on essential
traditional twentieth century social exclusion factors, services and natural resource endowments, as Cape Town’s
such as low income, unemployment, poor education and water crisis shows, is set to increase. South Africa has to
social isolation. In the case of South Africa, a society with find a way to build sustainable cities with greater access
more pronounced income and educational inequalities, to private capital and to avoid the risk of becoming both
the survey shows that, despite the hype surrounding uninhabitable and indebted.
smartphones connecting the poor, the digital divide

54
8
overall conclusion for a business
case in the country
South Africa has amongst the most advanced The 4th Industrial Revolution presents a vital opportunity
telecommunications and financial sectors in Africa, for industrial development in South Africa. However, the 4IR
comparing favourably with those of industrialised is also likely to marginalise the poor and the disadvantaged,
countries. It is, however, wracked by structural inequality who will not be able to keep abreast of rapid technological
and rising unemployment (27.5% in 2018 vs 20% in 1994) advancement and innovation. Developing people with the
exacerbated by a chronically under-performing education requisite digital skills to operate and manage advanced
system to address this. Economic growth - a low 2.1% and emerging 4IR technologies is key. Without adequate
over the last decade - has failed to keep pace even with preparation, South Africa will not be able to keep pace with
population increases. Key state-owned entities, such as the the new 4IR modes of production.
energy utility Eskom, and the state-owned transport entity
Transnet, are the victims of policy weakness, planning At present, there is little alignment of the education
failure and are bedevilled by corruption and patronage system to the current needs of industry, let alone those
that have undermined their ability to play a critical role of industry 4.0. The schooling system fails to produce
in the economy. young adults with the ability to think critically, work in
teams, engage with digital technologies or innovate.
In 2018, President Ramaphosa called an investment There is an oversupply of graduates in the humanities and
summit, followed by a jobs summit, in an attempt to social sciences and a critical undersupply of artisans and
kickstart the economy and create jobs. His recognition of technicians, scientists and engineers. An ongoing skills gap
the importance of the digital economy in achieving this is weakens the manufacturing and advanced industries.
reflected in the recent appointment of a 30-person 4th
Industrial Revolution Commission. He has also revived Despite the country having the highest mobile phone
the National Planning Commission to undertake a review penetration and internet use in Africa, South Africa does
of the 2012 National Development Plan, which had been not perform well in the global indices focusing on usage
developed with the goal of eradicating poverty, inequality and adoption. Even these indicators mask the extreme
and unemployment. The NDP had identified ICT as inequalities in South Africa. A full 50% of South Africans
critical to realising a more inclusive and equitable society. remain offline, largely those in rural areas, with low levels
However, many of the strategies to achieve the NDP were of education and little disposable income to afford devices
not implemented due to poor policy interventions, several necessary to access the internet. Furthermore, they lack
of which do not align with the outcomes of national the education and digital skills to utilise or benefit from
consultative processes. This in turn created uncertainty in internet access.
industry, along with the failure to implement key regulatory
and pro-competitive measures necessary for effective This is the case despite pockets of excellence, particularly
competition and increased consumer welfare. in the services sector (which uses Big Data analytics and
AI for financial and insurance forecasting) as well as in
Nevertheless, South Africa ranks ahead of India, Brazil mining (where automation is available) and large- scale
and Russia in terms of digital competitiveness, ICT exports commercial farming (where drones and the IoT are used).
and digital knowledge. Despite South Africa’s relatively
stronger digital position and the fact that growth in the ICT Empowering start-ups is vital in ensuring that South
sector is outstripping national growth, ICT’s contribution to Africa is part of the 4IR. The technology start-up space
GDP at 4% is considerably lower than emerging countries drives the growth of homegrown starts-ups and SMMEs
such as India and Brazil, where ICT contributes 7.7% using innovative solutions to solve problems in the region. A
and 7.1% respectively. key obstacle is the lack of funding in this space: Government
needs to create a favourable environment for investment
and provide support for the local start-up ecosystem.
56
While the manufacturing sector in South Africa is of 4IR technologies can make farming more efficient and
substantial, contributing to 14% of the GDP and employing cost-effective and increase yields whilst reducing costs.
about 1.2 million, agriculture only contributes 2% to GDP. Furthermore, there is a significant gap to be addressed
Manufacturing is hampered by a lack of foreign investment by connecting small farmers to the agribusiness and to
and a decline in capital stock and by increased imports of commercial agriculture and by giving them access to
manufactured goods. To boost trade in the country and the necessary technologies to improve productivity and
beyond South African borders, infrastructure, customs increase outputs.
procedures and logistical systems need to be improved.
Cross-border collaboration will be crucial. The government’s role is to create an enabling environment
for investment and innovation. In the context of the
With regard to regional integration, if the SADC region 4th Industrial Revolution and regional integration, this
wants to take full advantage of the 4th Industrial would entail less complicated and more efficient trade
Revolution, its policies must be aligned with global trends rules and harmonised regulation and taxation, with the
on digitalisation. Its regional priorities to unlock the 4th ultimate objective of developing paperless trade systems.
Industrial Revolution are related to digital infrastructure The internet can also enable transparency in terms of
and connectivity, affordability, skills and awareness, trade processes by sharing information on existing laws,
entrepreneurial development and local content. regulations and procedures on an online platform.
Despite the agriculture sector’s relatively small contribution A summary of markets that can be targeted by sector and
to the GDP, it is vital in the South African economy. The use technology is presented below.
regional
agriculture energy industry wellbeing
integration
LEGEND
TECHNOLOGIES TO BE TARGETED BY PUBLIC POLICIES AND PUBLIC BANKS
AI big data blockchain drones 3D printing IoT
LEGEND

9
recommendations
With the national economy on the edge of contraction and with industry
struggling to inject value, opportunities and jobs into the market, the
ICT sector can, under the right policy and regulatory conditions, serve as
an enabler of growth. As a key input for other sectors in an increasingly
digital economy and by creating new services as well as by creating
formal and informal employment, South Africa’s ICT sector has the
potential to perform far better than it does in the global rankings and
more in line with the size and sophistication of the economy.
58
9.1 RECOMMENDATIONS AT THE NATIONAL LEVEL in areas such as enabling infrastructure, research and
With the national economy on the edge of contraction and development, innovation policies and data regulation.
with industry struggling to inject value, opportunities and In particular, adopting open data policies and a data
jobs into the market, the ICT sector can, under the right policy governance framework has the potential to spur
policy and regulatory conditions, serve as an enabler of entrepreneurship and innovation and drive efficiency.
growth. As a key input for other sectors in an increasingly
digital economy and by creating new services as well as by Specific interventions include:
creating formal and informal employment, South Africa’s • developing an integrated national digital policy
ICT sector has the potential to perform far better than it that cuts across sectors and enables a high level of
does in the global rankings and more in line with the size integrated planning and implementation, allowing the
and sophistication of the economy. For this to happen, public and private sector co-ordination required to
considerable effort will need to go into addressing the harness the benefits of the 4th Industrial Revolution
demand-side limitations in the sector. Specific issues whilst mitigating its risks;
to be tackled include ensuring affordability of access; • deepening public-private partnerships such as
addressing the digital skills deficits; improving levels of Business Process Enabling South Africa (BPESA) and
human development; ensuring greater alignment between Harambee to align skills and to create jobs in the
the supply of skills and labour market needs. rapidly reviving business process outsourcing sector;
• adopting open data policies within a well-developed
To embrace the 4IR, South Africa will have to invest in data protection and rights framework;
developing new digital skills aligned to the technological • implementing the stalled 4IR strategy for the public
revolution. This means building a pipeline of future talent, sector developed by SITA;
from primary school up to university, that can embrace the • strengthening the manufacturing and the agriculture
age of emerging technologies. As the 2017 After Access sector by encouraging the use of technology while
survey shows, a key blockage to the adoption and use of training and creating jobs for skilled personnel;
the internet is a lack of technological skills, with 48% of • incorporating 4IR technologies into the health and
those in the 10 African countries surveyed (South Africa education sectors;
included) not knowing how to use the internet. • addressing not only the lack of digital skills but basic
education, which needs to be adapted to new and
The 4IR makes it essential to develop a diverse, adaptive relevant ways of learning, not in conventional silos;
and digitally skilled workforce. Critically, the school • expanding power and broadband infrastructure
curriculum must be revamped, not only to foster the take- capacity that is universal, stable and affordable; and
up of science, technology, engineering and mathematics • supporting the commercialisation of local innovations
courses, but also to promote critical thinking, flexibility and start-ups through microloans, hubs with subsidised
and creativity. These are challenges not specific to the bandwidth, entrepreneurial and leadership training.
4th Industrial Revolution, but they are exacerbated by its
emergence. While automation and AI can replace industrial 9.2 RECOMMENDATIONS AT THE REGIONAL LEVEL
workers and clerical competencies, they cannot substitute The southern African region is in the early stages of
for leadership and creativity. The workers of the future will formulating a 4IR policy, strategy and framework. The key
need to be provided with ‘soft’ attitudinal skills as well as areas of focus for the SADC to achieve its industrialisation
‘hard’ technical skills. Greater automation in industry leads and regional integration objectives in the 4IR era should
to disruption and displacement in the world of work, which include:
requires workplace upskilling and large-scale development
of entrepreneurial skills.
• identifying current strengths, weaknesses, capacity
Beyond education and skills, much needs to be done gaps and opportunities for collaboration between

member states in terms of digitalisation; Agriculture sector: Opportunity to finance agricultural

• revising education systems to include digital co-operatives and to incentivise support for small
skills and their underpinning competencies and farmers from commercial agriculture to adopt
altitudinal values to ensure relevance for 4IR technologies such as satellite imaging from drones, the
technologies and advancements; IoT and Artificial Intelligence.
• supporting member states in transposing existing Agricultural production needs to increase to sustain
model laws dealing with e-commerce and local demand and to feed the growing population whilst
e-transactions, data protection and cybersecurity to ensuring food security in the country. The sector can
include provisions appropriate to the 4IR; play a major role in the economy and in job creation.
• promoting Public-Private-Civil Society Partnerships Technologies, such as drones, satellite imaging and AI, are
in areas requiring collaboration, such as regional widely used in commercial agriculture. Extending such
broadband infrastructure roll-out or cybersecurity or technologies as these to small farm holders via collective
open data; ownership by the community, subsidised by government,
• promoting and facilitating the commercialisation of or even through funding for commercial farmers to ‘share’
innovations by providing support to start-ups and the the technologies with the smaller farmers, could increase
informal sector in the region; productivity and improve output. Collaboration between
• developing a strategic plan for the 4IR and commercial agriculture, agri-food companies, government
digitalisation for the region. This should also include and small farmers will be an important step towards shared
a platform and framework for member countries to economic growth.
harmonise their national strategies on the 4IR and to
share best practices. Upskilling youth: Opportunity to provide financial
support for youth accelerator programmes directly
9.3 POTENTIAL AFDB PROJECTS engaged in training digital skills.
The AfDB could finance or provide support in relation to Harambee is an award-winning youth job accelerator
the following projects: and training programme that connects 500,000 youths
with 50,000 employers and has given 100,000 young
Digital Infrastructure for Public Sector people a pathway to jobs . It is regarded as a blueprint for
Opportunity to fund the extension of the SITA Cloud public private partnerships and youth job creation. Unlike
for the Public Sector project described above, which other youth digital vocational training, such as We Think
will align the public sector with the government’s 4th Code (which runs a two-year training course at a cost of
Industrial Revolution mission. This takes the modernisation R250,000 per individual and has only produced a few
programme much further, deploying advanced thousand employees for industry), Harambee has, on the
technologies for a virtual interface with the private sector basis of extensive research and data analysis, found ways
in terms of procurement, but also includes an open data to scale effectively. It has disrupted traditional training
policy with the intention of sharing government data for domains and challenged conventional wisdom about
Big Data analytics. what the digital industry’s needs are. It has partnered with
industry and government to identify new labour needs and
The strategic plan for this was to be signed off under to find pragmatic solutions that have produced results. It
the current administration, but, with parliament rising has demonstrated that youth without formal qualifications
early for elections, this was not done. There is now some of various kinds can learn and successfully perform highly
concern that, with the CEO’s decision not to renew his digitalised tasks. With Digital Action Lab, it brought together
contract, and with this being an area of contestation with all the major players, including IBM, Amazon, Microsoft,
vested interests, a new administration may go back to the Dimension Data, to accurately identify new needs. After
drawing board. considerable deliberation over a period of time, it has
identified a few job families that it is focusing on in terms
60
of training: data scientist, entry level Java coding, testing offers a possible platform for the secure execution of smart
capability, cloud engineering and entry level cybersecurity. contracts over peer-to-peer networks with independent
power producers and the potential to create a transparent
Data scientists and analysts: Opportunity to identify supply chain. The introduction of Blockchain might work
and fund scalable projects for digital skills required by to increase efficiency in the deployment of renewable
businesses and trained by youth accelerator initiatives. energy by supporting its integration into the grid in a cost-
Harambee operates on a number of channels – mobile effective way.
for candidates, a contact centre, a learning management
system, prototype self-serving portals to deal with the Smart townships: Opportunities to finance and support
expanding scale and scope of the business. This provides the development of smart townships. The concept of
constantly evolving interaction layers between staff, smart cities has been presented as a key application of
employers and candidates. To do this and in recognition 4IR technologies and is becoming a dominant discourse
of the fact that the data that it generates is a major asset, in urban planning. This discourse has permeated through
it has built an entirely new data environment. Its old to most South African metropolitan cities such as
business model was based on one offering for millions of Johannesburg and Cape Town. However, there is increasing
people. The new model now offers millions of options to a evidence that smart cities exacerbate developing country
single person. They have built a platform that is intelligent problems of poverty, inequality and poor living conditions.
enough to present unique content on the basis of the In South Africa the approach is likely to entrench apartheid-
person’s unique profile and journey. It is in the early stages inspired spatial segregation and inequality.
of applying Machine Learning to automate the processes of
moving candidates through training, , running diagnostics Instead of being technology-driven, alternative strategies
on them and pairing them with employees. that meet citizen needs have been emerging. For example,
the Cape Digital Foundation has argued that megacities
There is enormous potential to expand this business but in the global south should be redefined to be in line with
also for this to serve as a use case in other countries. There the township ecosystem. What South Africa needs is the
is a massive scalable project in the crossovers between development of smart townships to ensure that the people
BPESA and Harambee because digital companies do not in these areas can be a part of the 4th Industrial Revolution.
know how to provision BPO services (as they only know Neglecting these areas will widen the digital gap and the
how to sell candidate or project-based work) and BPOs do inequality that South Africa is currently facing.
not know how to build apps. With expanding demand for
South Africa as an offshoring destination, Harambee is not Building South Africa’s smart townships requires more
only able to provide suitably trained labour but is also able than just digital skills training and goes hand in hand with
to support the application of AI and Machine Learning to providing the training and skills to individuals in becoming
deal with the changing scale and scope of the business township entrepreneurs. This can be achieved by providing
world. To take it to scale and build a sustainable business digital skills training and upskilling for SMME business
case may require funding beyond that provided by the DST owners so that jobs are created and income is retained
and the Jobs Fund. within township communities, boosting circular economy
jobs. The success of smart townships will depend on the
Blockchain in energy: Opportunity to support development of five core pillars, namely reliable digital
Blockchain initiatives within the context of renewable infrastructure, affordable connectivity, digital skills, local
energy, an area where South Africa has made considerable content and data collection.
progress. The potential for South Africa lies in investment
in the smart grid (Blockchain and AI) and, in the context The role of the bank would be to invest in the smart
of advanced renewables, by integrating technology to township/village initiative to provide an alternative use
increase efficiency in distribution channels. Blockchain case to the much-criticised smart city initiatives in Africa.

EN
end notes
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20
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62
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AfDB
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idem
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49
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50
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51
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idem 81
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54
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56
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End notes 65
The views expressed in this publication are those of the authors and do
not necessarily reflect the views and policies of the African Development
Bank (AfDB), its Board of Governors, its Board of Directors or the
governments they represent.
AfDB and its Board of Directors do not guarantee the accuracy of the
data included in this publication and accept no responsibility for any
consequence of their use.
By making designation or reference to a particular geographical area, or

by using the term “country”, AfDB does not intend to make any judgments
as to the legal or other status of any territory or area.
AfDB encourages printing and copying information exclusively for

personal and non-commercial purposes with proper acknowledgement
of AfDB. Users are restricted from selling, redistributing, or creating
derivative works for commercial purposes without the express, written
consent of AfDB.
66
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unlocking the potential of the fourth industrial revolution in Africa

COUNTRY CASE STUDY

Alison Gillwald, Enrico Calandro, Francie Sadeski, Matthieu Lacave

country case / South Africa 3

4IR Fourth Industrial Revolution

country case / South Africa 5

• it reviews the socioeconomic situation of the country

Our team collected data drawing on existing research

The structure of the document is based on eight chapters.

country case / South Africa 7

country case / South Africa 9

country case / South Africa 11

country case / South Africa 13

country case / South Africa 15

political stability and absence of

voice and accountability

2007 2012 2017

country case / South Africa 17

ENVIRONMENTAL- 33 READINESS- 69 USAGE - 75 IMPACT-93

Political and Infrastructure and digital content

Affordability, 74th Business, 32nd

Business and innovation, 65th Social impact, 112th

country case / South Africa 19

Tech Hubs, Incubators

The World Bank was responsible for seeding MLab in

The Department for Science & Technology (DST) also funded

current level of utilization of technologies

artificial big data analytics blockchain drones 3D printing IoT

potential for applications

artificial big data analytics blockchain drones 3D printing IoT

country case / South Africa 25

Providers see the use of technology as a complementary

3.2.3 Drivers and challenges specific to agriculture

The technological development of the agricultural sector

However, the payoff for success is substantial: agriculture

country case / South Africa 27

current level of utilization of technologies

artificial big data analytics blockchain drones 3D printing IoT

potential for applications

artificial big data analytics blockchain drones 3D printing IoT

1990 1995 2000 2005 2010 2016

country case / South Africa 31

country case / South Africa 33

BW1 BW2 BW3 BW4 BW5 TOTAL

Solar PV 627 18 417 9 - - - - 813 12 2 292 45

Solar CSP 150 2 50 1 - - 200 2 - - 600 7

1425 28 1040 19 1457 17 200 2 2205 26 6327 92

BW1 BW2 BW3 BW4 BW5

Onshore wind 1.36 1.07 0.78 - 0.68

Reduction from previous round - 21.3% 27.1% - 12.8%

Total decline from BW1 - - - - 50%

Solar 3.39 1.96 1.05 - 0.82

PV reduction from previous round - 42.18% 46.43% - 21.9%

Total decline from BW1 - - - - 75.8%

CSP 3.2 3 1.74 1.62 -

Reduction from previous round - 6.25% 42.0% 6.9% -

Total decline from BW1 - - - 49.38% -

country case / South Africa 35