Failing grade for IT industry

Johannesburg, 21 Nov 2008

South African cities continue to grow in the global emerging markets space, but failures in key IT areas will negate this growth, says a new study.

The 2008 MasterCard Emerging Markets Index looked at 65 emerging cities and compared their critical economic and business functions, revealing growth in various sectors of SA's economy. This year, Johannesburg ranked as the top South African city, in 11th overall, followed by Cape Town, ranked 33rdand Durban, at 37.

The three South African cities listed were ranked first in the business environment dimension, which the survey called, “the most critical dimension defining the commercial importance of a city within an emerging market”.

Gloomy reality

However, all three listed cities received poor rankings for education and IT connectivity. This was assessed through indicators such as the number of broadband subscribers, higher education centres per million, total telephone subscribers per million and Internet users per million.

Education is an area that needs to be addressed, says Mike Schussler, chief economist at T-Sec. “We may be pumping a lot of money into our education system, but our outcomes are still very poor. We are continually being outperformed by poorer African countries, such as Ghana.”

The failure to keep up with world trends would prove detrimental, he notes. “The whole world is moving into a knowledge economy and we are still lagging. We are still failing in this area.”

The survey reveals that telephone and Internet subscriptions remain very low. Schussler attributes this to high cost, saying: “Our broadband isn't at the level it should be and the cost is too high.”

The South African cities' rankings are a sign of a leading emerging nation in the making, states the survey. But, Schussler warns, this will not happen without more competition.

“Every sector - from radio stations, TV to broadband, Internet providers and telephone operators - needs more competition.”

Gateway to Africa

According to the survey, SA is “clearly on the move and worth watching. South African cities serve as important gateways to other African markets and will grow in value as Africa becomes more open to Western companies and products.”

Johannesburg's regional ranking of seventh“reflects the growing economic strength of SA and its strong financial and commercial institutions,” the survey stated.

But, without strong educational institutions and infrastructure, SA cannot play an increasingly important role in “helping the global economy weather changing tides”, revealed the survey.