Low expectations for ICT in budget

Expectations for a focus on the ICT sector in finance minister Pravin Gordhan's budget speech tomorrow are fairly low, say analysts.

"I don't think we should expect anything in terms of the value of ICTs being acknowledged," says Arthur Goldstuck, MD of World Wide Worx.

Dennis Smith, MD of BMI-TechKnowledge, says the approval of a national broadband strategy in March or April will give a good indication of the government's position in terms of ICT.

However, he also echoes Goldstuck's low expectations for the budget speech. “ICT is not a priority. We can expect the broadband strategy to move it up a few points, but it's still right at the bottom.”

These opinions come despite Gordhan highlighting the role of ICT in government's growth strategy during his medium-term budget policy presentation, in October last year.

“I'd like to see him investing in ICT, but money would be thrown at the likes of Sentech or SITA [State IT Agency], who haven't yet proven that they can do the job,” says Goldstuck.

ICT industry analyst at Frost & Sullivan Spiwe Chireka feels this is the government's chance to prove its commitment to ICT.

“There is likely to be a highlight of ICTs this year, because there was an emphasis on telecoms in the state of nation address [last Thursday],” says Chireka.

She specifically expects that spend will go into improving connectivity and telecoms access, especially on expansion into rural areas.

“It will be interesting to see which technologies and communications will be addressed. Depending on what is [addressed] we will know whether we can take the state of nation address seriously, or if it's just fluff.”

Last year, the Department of Communications was allocated R2.2 billion to spend in the current financial year, which is drawing to a close. Some R548 million of that amount was allocated for ICT infrastructure development.

National Treasury's 2009 expenditure report said most of this amount was earmarked for the 2010 Soccer World Cup. As the project comes to an end, the allocations were expected to decrease to R450 million this year and R150 million next year.

Some R1.3 billion was set aside last year for ICT enterprise development, which includes state-owned enterprises like Sentech and Broadband Infraco.

Sentech had been allocated R100 million for 2009/10 for ICT infrastructure development for the World Cup. In total, National Treasury allocated R360 million to the signal distributor, with the balance of the funding to be used for completing its part in the digital migration of TV services.

This fell far short of the R917 million that the company said it needed to cover the costs of running both analogue and digital broadcasting signals.

The expenditure estimates for 2010/11, as outlined in the 2009 budget estimates, were R4.7 billion for the departments of science and technology; R2.26 billion for communications; R5.75 billion for trade and industry; R402.8 million for public service and administration; and R311.9 million for public enterprises.

These are the departments that have some impact on the ICT sector as they either control large IT budgets, or are responsible for formulating policy that does.

Specific expenditure for the new financial year for each department and their projects is expected to be outlined tomorrow.