A tech-enabled future will create jobs for the unskilled and the reskilled
Innovative business models are already unlocking opportunities to access work that does not require advanced tech skills
President Cyril Ramaphosa warned at the University of Johannesburg’s celebration of 25 years of democracy in July that South Africans should brace for mass job losses. This was after a punchy address at the inaugural SA digital economy summit, where a holographic version of the president was broadcast to attendees at the Rustenburg Civic Centre.
As SA navigates the transition to a new industrial revolution, everyone is asking where this leaves the country in terms of its biggest development challenge: creating sustainable work opportunities. The president is right; automation is already leading to the shedding of jobs, mostly in low-skilled services where most South Africans look for work.
But digital business models are also unlocking new opportunities for people to create and access meaningful work. Most of these opportunities will be work that does not require advanced tech skills but which is enabled by digital processes. South Africans are already earning income through driving for e-hailing platforms, virtually tutoring Chinese students and performing outsourced tasks for foreign companies.
None of this is particularly new, but these opportunities remain nascent and, if other countries are a guide, can grow massively. As traditional growth pathways taper off, SA’s ability to significantly scale these emerging opportunities will determine our collective prosperity as a nation.
A new initiative called SA in the Digital Age (Sada) is shedding light on how to achieve this. The initiative is a partnership between the global Pathways for Prosperity Commission, the Gordon Institute of Business Science and Genesis Analytics, and is primed to work constructively with the presidential commission on 4IR and 4IRSA. The initiative will deliver the beginning stages of a national economic strategy for SA in the digital age to the president’s public-private growth initiative.
Sada has identified three areas where concrete opportunities for scaling work can be grown using technology. The first is globally traded services. Improvements in ICT are opening up a broad set of services that have traditionally been proximity based, but are starting to be provided virtually. SA can grow work opportunities in its small but competitive global business services sector by expanding into target markets like the US, Canada and Australia. This would require leveraging our current advantage in English-speaking talent in new areas such as digital/ICT outsourcing and shared services like finance, accounting and legal process outsourcing. New forms of globally traded services are also emerging as communication technologies get better and cheaper.
Sectors where services are traditionally provided face to face — such as education and health care — can now tap into global sources of demand by providing services virtually. As an example, companies in SA have already set up call centres for South Africans to provide tutoring services to Chinese students virtually through a learning platform. These types of opportunities can scale quickly as they are not constrained by local demand. Our estimates suggest that 100,000 new jobs could be created in the next five years, with the total increasing to 500,000 in 10 years.
Although tech-enabled work creation is mostly associated with mid- and high-skill work, there is a real opportunity to scale low-skill domestic work opportunities through digital platforms that connect market participants. This is the second major area of economic opportunity for SA. These platforms generate significant cost and efficiency gains that unlock latent demand for low-skilled services like drivers; installation, repair and maintenance services; and domestic work.
E-hailing platforms provide a good example because they were able to fix a number of issues with SA’s metered taxi industry — high costs, low trust and credibility screening, and the inconvenience of finding service providers — using a smartphone app and a smart algorithm. As a result, there are now far more people using driving services through e-hailing than there were in the traditional metered taxi market, and so more people earning an income from driving work.
This effect of unlocking latent demand is already taking place in other sectors — such as Domestly and Sweep South for domestic services or Kandua for maintenance services — and can scale significantly in a number of corporate supply chains where informal or small businesses can benefit from aggregation.
The last set of opportunities relate to positioning SA as a frontier technology hub for the region. Although countries like the US and China are likely to remain the main producers of frontier technologies, there is an intermediary role for SA stakeholders to play in applying these technologies to local and regional market opportunities. In addition to the direct jobs this can create in the tech sector, facilitating the adoption of digital business models in sectors like agriculture, mining, and manufacturing can also unlock new production models and new work opportunities for South Africans.
Sada has started to identify the cross-cutting enablers that need to be in place for all of these opportunities to be realised and scaled. The first is universal digital access. SA needs more affordable mobile data and a better coverage of fixed-line infrastructure so that everyone can access opportunities in the digital economy irrespective of income and location.
The second is human capital. SA’s education ecosystem needs to provide a scalable pipeline of talent that delivers the digital and nondigital skills that are demanded by the private sector. This will require financing and accreditation that recognises the alternative education pathways that allow people to upskill and reskill quickly and affordably.
The third is government support. SA’s public sector needs to be a custodian of innovation through an enabling regulatory environment and appropriate incentives, a creator of economic opportunities through fiscal tools and smart procurement, and a bridge for the poor to access digital opportunities.
The fourth is innovative business. SA’s private sector needs to develop and scale new business models using technology. For that to happen, inputs into the processes of entrepreneurship, innovation financing and the diffusion of technology across markets need to be scaled, particularly so that informal and small businesses can innovate.
Lastly, constructing ecosystems around these specific opportunities requires co-ordinating stakeholders that do not usually co-operate to buy into a common agenda for change. It includes organisations that play a facilitating and convening role to form coalitions of the willing among government agencies, business and civil society to channel resources and unblock obstacles to scale.
• Nyati is CEO of Altron. He chairs the Sada process and is head of the ICT part of the public-private growth initiative between the presidency and private sector.