Technology could save us from junk status
Recently, Moody’s Investors Service said digital technologies such as automation and artificial intelligence could enhance countries’ credit profiles. This comes as a relief as SA struggles to avoid junk status.
Moody’s is the only ratings agency that has maintained an investment-grade rating for SA. Even so, we hover just above junk status, with a negative outlook. This means a ratings downgrade is still very much on the cards unless we urgently look at the opportunities new technologies offer us.
The key, according to a recent Moody’s report, is to use the benefits of technology while managing the disruptions they cause.
The most important disruption to manage in SA is possible job losses due to automation. In a country where many jobs are repetitive and low-skill, we need to balance the use of technology on the one hand and the upskilling of our workforce on the other. If we don’t get this right, not only will we be downgraded, but the country will face mass protests and social tension because technology will add to unemployment rather than fight it.
The report by Moody’s indicates that widespread automation will reduce job security and increase inequality as it reduces low-skill work. I disagree.
The silver bullet for SA, if there is one, would be to adopt technology and adapt our workforce to use technology optimally. Our approach should be one where we harness technology to enhance our human resources, rather than viewing it as a threat to job creation. The machines are not coming to take our jobs; they are coming to help us do our jobs faster, more efficiently and reliably, leaving us to focus on the bigger picture.
I agree with Moody’s that, over time, automation should allow companies to streamline operations and production processes, which, in turn, will raise productivity, growth and wealth. If we see technology as a vehicle to create new types of jobs, where workers no longer have to worry about mundane and repetitive tasks, we can change the perception that technology is the enemy of job creation. If we can convince the SA workforce that upskilling and retraining are the way forward, then we can fully embrace the fourth industrial revolution.
There are many benefits to this approach. First, we are seen on the international stage as a tech-savvy nation and willing to adopt cutting-edge technology to reach our economic goals.
Second, we have the opportunity to grow our workforce and ensure their skill levels are above the mundane and unsatisfying. This, in turn, could lead to workers being paid more as they have better skills and increased job satisfaction. Possessing skills in niche technology industries can make workers indispensable to employers, ensuring long-term job security. This, again, can lead to increased investment appetite in SA as the job market will be more stable.
However, technology and innovation will require substantial upfront investment because SA doesn’t have the capital to self-fund these developments. If we position ourselves as a tech and innovation hub with useful and niche skill sets, international investors with capital will look towards our country with confidence.
Often, investors have the capital but no projects to invest in. SA does not have the capital, but we have the ideas and deals for investors to seize. If we can match investors with projects, we can derisk investment in SA. Once investors see that SA is a safe investment destination, they will not only invest close to home, but rather look towards our tech-savvy, developing economy at the tip of the African continent.
Using technology to bolster our workforce, our governance and our economic growth will give investors the confidence they need and could prove to ratings agencies that SA has a stable, even positive, growth outlook.
If we don’t ride the wave of the fourth industrial revolution and ensure we are at the forefront of technological developments in Africa right now, we risk being swept away by the tide of further negative economic outlooks. This is something SA cannot afford.
• Ferreira is the co-founder and CEO of Osidon.