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SA's ICT space lacks spark say analysts

By , Portals editor
South Africa , 04 Aug 2015

SA's ICT space lacks spark say analysts

Some ICT analysts and market researchers who monitor Africa's progress have suggested that in terms of overall energy levels, cultivating an environment for partnerships and general 'vibe', South Africa has lost some ground to regional counterparts on the continent.

Mark Walker, regional director for sub-Saharan Africa, at the IDC, covering Middle East, Africa and Turkey, said he recently had a discussion with at a business forum development firm in North Africa where South Africa was described as 'impenetrable'.

Walker puts this in context saying that South Africa's current commercial environment has leanings towards monopolisation and over-protection which benefits the few, but is not sustainable – particularly as far as startup businesses are concerned, for example.

"There is monopolisation in South Africa, there's the telcos, the electricity supplier... especially if there's the hand of state in it, there is a huge 'jobs for pals' type story and if it is not benefitting that monopoly, it just doesn't happen," he says.

Regional multinationals are also protecting their turf, Walker explains, whereas the likes of Amazon, Google and Facebook have "had to come in through the back door" and not use the traditional approach of partnering with established players to in exchange for access to the marketplace.

"Typically, you see these guys coming in and having to start up on their own, or start up small to build their business... I don't know how sustainable this is overall," Walker said.

While he does not subscribe to what he believes is a conspiracy theory that there are those pursuing an agenda to artificially isolate the South African market, Walker does feel that there is a general unwillingness to collaborate or partner..."unless it is benefitting them or their partners directly, it is off the table."

Kenya the opposite

In December 2014 Walker said that South Africa used to be the leader with an ICT edge, it is now lagging behind sub-Saharan counterparts like Kenya, Rwanda and Ethiopia.

He describes the Kenyan market as the exact opposite to South Africa and is actually opening up for business partnerships and collaboration.

"There's a reason why Windows 10 was launched there and why they are ahead in white space TV compared to South Africa," he adds. "They are open to doing business, getting things done, moving ahead... technology is seen as a fundamental for economic growth and citizen inclusion. They are using technology to improve the country."

At the same time Arthur Goldstuck, tech industry analyst and managing director of World Wide Worx, says it is important to look at Kenya in its own right and not in comparison with South Africa – because they are such different markets and because, more broadly, there are numerous myths around Kenya's tech 'miracle' he says.

"The infrastructure in Kenya is abysmal ... the transport infrastructure in particular, traffic in Nairobi is a nightmare compared to anywhere in South Africa, and getting around is a massive mission. There's huge challenges in Kenya... but what has changed in Kenya is was that the government has a bunch of undersea cables connecting the country, where just six years ago they had nothing... overnight there was almost a switch on of the digital economy, which barely existed before."

As a result of this there has been massive growth and emphasis on new projects, whereas in South Africa this has evolved over time, Goldstuck explains. There has also been a significant rise in the number of mobile internet users.

"Which you are now seeing in South Africa as well... the big difference (with Kenya) is the quality of connectivity is very poor. There are a lot of people connecting, but the quality of connectivity is poor and way behind that of South Africa," he continues.

Goldstuck also cautions against reading too much into the Windows 10 launch scenario and the visit by Microsoft's CEO Satya Nadella to Nairobi over Johannesburg.

Goldstuck interviewed Nadella who explained that the rationale behind the decision to visit Kenya was based on the fact that he had to choose to attend one of thirteen cities that were hosting Windows 10 'fan celebrations' and he was also motivated to visit a region where he would learn something new - particularly in terms of how people overcome the barriers to connecting to the internet in the future.

"His prime motivation was to learn about what people are doing in very limited circumstances, and he specifically wanted to avoid a market that contributed significantly to Microsoft," said Goldstuck. "The previous two Microsoft CEOs both visited South Africa, neither of them visited any other African market as CEOs of Microsoft, so that was another factor."

However, Goldstuck shares Walker's view that South Africa's ICT and telecommunications is lagging behind when it comes to a 'general vibe' and to innovation.

He says that it is not because no-one is doing anything, it is because things tend to be done in isolation so one only hears about developments when there is a breakthrough or startup competition.

Frost & Sullivan has also said, "Kenya is set to become a hub for regional trade and the fastest growing East African country. The level of development is evident in all urban areas and multiple sectors will benefit from the road and rail infrastructure developments taking place. A strong government commitment to economic transformation through infrastructure will secure a significant amount of foreign direct investment over the next five years."

Brian Neilson, director at BMI-TechnKnowledge, says that South Africa certainly seems to have fallen off the wagon in recent years from an ICT leadership perspective, and Kenya has done a lot to boost its own profile in this regard – including entrepreneurship initiatives, some of which are attracting crowdsourced funding.

"What SA needs to do is focus on the goal of clawing back its former position on the continent. Focus implies going back to the basics: fostering a stable, predictable environment for investors, free from wasteful politicking and corruption, and promoting entrepreneurship through partnerships with industry. Some of this is happening, through DTI initiatives, but tends to be drowned out in the constant noise generated by the political melee," says Neilson.

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