What the fourth industrial revolution means for SA business

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As we draw close to the end of another year, SACCI is reviewing developments that took place during 2018, and that have had a bearing on business going into 2019. SACCI will be hosting its 2018 annual convention on 8 November at the Hilton Hotel in Sandton. The topic and theme for discussion is “Innovation and the Fourth Industrial Revolution”.

The fourth industrial revolution has underpinned most global debates this year, from the WEF Davos meeting, through to the 2018 BRICS meeting (held in Johannesburg in July). It will most likely also feed into the major themes of discussions at the G20 and WEF in 2019.

In October, we saw the conclusion of the presidential Jobs Summit, the announcement of a stimulus package by government to alleviate poverty, inequality and unemployment, and the Investment Summit.

Social partner discourse throughout this year has revolved around jobs and investment summits’ preparations and outcomes. Business has come to the table with some new, innovative collaborations in an effort to increase job creation and employment – through the KYB Incubator early childhood development projects, the employment wage incentive remaining in place, and the youth employment service initiative. Labour has pushed for the same results but indicated that it is against the digitalisation of jobs in the name of economic growth. Fair enough, but there’s more debate that needs to take place on how South Africa moves with the times in an age of social media prevalence and digital disruption, while still holding onto traditional labour and capital production functions.

Government has had its own battles trying to establish a renewed public sector and re-build trust in the system, while trying to innovate and remain relevant. The 2017 Zuma and Gupta debacle around state capture is only becoming fully known now through the Zondo Commission, and various other commissions of inquiry into institutions such as SARS. President Ramaphosa announced a succinct stimulus package promising a lot. As was commented on by SACCI at the time, there is still a lot of detail missing on how exactly the stimulus package will be financed and distributed to truly spur economic growth and address the country’s many challenges. We wait and see what Minister Mboweni’s first medium-term budget and budget speech deliver in this regard. We also anticipate possible findings from the commissions of inquiry around the repatriation of looted assets, a reform of state-owned entities, and possible follow up on the finding’s or former President Mbeki’s high-level panel on illicit financial flows.

What is clear is that the gaps are big. The needs are big. But what concrete proposals and implementation strategies will be used to actually achieve outcomes for the benefit of all? Innovation and technologies, leap-frogging as most call it, is key to overcoming such challenges as climate change. But will South Africa be able to traverse this path without conflict? We have seen how the introduction of Uber and Taxify have caused much consternation and unrest within our public transport sector. While there has been no backlash yet, the digital disruption to things like medical aid and e-learning are also likely to create bigger divides within health and education sectors, between private and public funded initiatives. Business and government must work together to find a cohesive solution.

These are big issues when one thinks that these sectors receive the lion’s share of public funding and government is moving towards the national health insurance policy. Is it perhaps time to rethink public-private partnerships? Is it time to recapacitate institutions such as NEDLAC for more robust social dialogue? Or do we simply need to make space for activism by civil society and the media?

One thing is certain; South Africa should proceed with caution. Yes, digitisation can bring great leaps in development and innovative solutions to social problems. One cannot digitise integrity though. Case studies from several countries show that while the introduction of integrated financial management information systems has streamlined government accounting, it has also provided the corrupt with an easier way to loot the system. This can be said for any procurement or tender process that involves entries into a non-transparent and closed digital system. So what to do? We can no longer rely on the values of an office holder not to pervert the system.

Well for one, it is important that there are checks and balances, both within the digital system, and in the bodies responsible for monitoring these systems. Information should be available to the public and be transparent. No one should be free from scrutiny. Also, constant vigilance is required, with regular reviews and reforms to the systems and regulations in order to continually close loopholes. Think of it as one would think of the tax system. Tax evaders exist no matter how strong the system is. But the job of authorities is to be ever vigilant and reduce the opportunity for evasion or creative accounting. The same goes for the broader economy as it moves to more and more technology-driven means of exchange.

As the year closes, SACCI is optimistic in the ability of social partners to work together on these issues. We can overcome the shock and horror of state capture under president Zuma. And we can work together to avoid such a situation ever occurring again. By implementing the right monitoring and evaluation processes and the rebuilding of strong anti-corruption agencies, strong institutions and re-establishing the rule of law, the future for South Africa and doing business in South Africa remains hopeful.

Wishing all readers the best for closure of 2018, and prosperity for 2019.

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