ICT's role overlooked

Government's aims to grow the economy and trim unemployment are the key focus of this afternoon's mid-term budget speech. However, the role ICT can play in achieving these goals has been overlooked.

Government's new growth plan, which aims to create five million jobs in the next decade and trim unemployment from 25% to 15% over the same time, was revealed yesterday. It focuses on key sectors that can aid developing the economy to trim unemployment.

Finance minister Pravin Gordhan this afternoon said: “As we move out of the depth of the greatest recession since the 1930s, we find yet another hill facing us - the highest, perhaps, we have yet had to climb. This is the creation of jobs and the reduction of poverty.”

Gordhan was presenting the mid-year budget to Parliament, this afternoon.

Infrastructure is among the six key sectors that have been identified, which includes expanding transport, energy, water, housing and communications. In addition, said Gordhan, to achieve SA's developmental aims, the country needs to promote rapid job creation through policy initiatives that include more investment and competition in the communication sector.

However, it does not seem this investment will be driven by government. Total government spend on infrastructure over the next three years will amount to R811 billion, but 40% will go into energy, 26% into transport and 11% into water supply. No mention was made of new allocations for communications infrastructure.

In addition, the adjustments to the Department of Communications' budget are small, with its total budget having only been adjusted slightly upwards to R2.138 billion, from R2.114 billion.

No adjustments to Sentech's funding were included in the review, despite the parastatal's plans to play in the broadband and broadcasting infrastructure space. Public enterprises, which oversees Broadband Infraco, makes little mention of this strategic asset. Infraco is set to launch its national network next month.

However, Gordhan said R22 billion had not been allocated to departments yet, and has been set aside for “key education, health, infrastructure and job creation commitments”.

The 2010 Medium-Term Budget Policy Statement, which accompanies the budget, says employment has dropped by more than a million jobs between the fourth quarter of 2008 and the second quarter of this year. The unemployment rate is now at 25.3% and many people have given up looking for jobs, says the document.

In addition, economic growth is expected to slow in the second half of the year, with full-year gross domestic product expected to reach 3%, before rising to 3.5% next year, and 4.4% by 2013.

“At these rates of growth, it will take some time before the economy reaches full capacity,” says the policy statement.

Gordhan said economic growth in the sub-Saharan Africa region is expected to reach 5% this year, and 5.5% next year off the back of commodity prices.

According to often-quoted World Bank figures, a 10% increase in broadband penetration equates to a 1.3% increase in economic growth. Richard Hurst, senior analyst at Ovum's emerging market unit, yesterday said although more broadband may only add a few more basis points to economic growth, this will add up over time and aid in creating jobs.

Hurst said government needs to be more innovative in the ICT arena and enable business by providing a backbone as the world is now moving “beyond the information age”. “We need more leadership from government in terms of ICT, and not just platitudes.”

SA should learn from countries that have increased broadband penetration through government investment, noted Hurst. “Technology doesn't wait; the information doesn't wait.”