In the past year, a lot has been said about developing a renewable and sustainable knowledge-based economy in SA to reduce dependencies on non-renewable natural resources.
Science and technology minister Mosibudi Mangena and other members of his department have emphasised the need to develop IT skills to enable SA to compete in the international software development arena.
South Africa is often likened to India because of the high level of software skills available and the relatively low cost of software development relative to the rest of the international market. However, SA has so far failed to achieve the IT successes of India or even Ireland.
According to members of the local software development industry, the reasons for that failure are clear, but somewhat ironic.
Most agree that the years of isolation only served to strengthen local IT skills, and software development skills in particular.
Isolation meant that local enterprise did not have access to the best of breed software solutions available on the international market, and consequently either had to develop them for themselves or pay others to develop local alternatives to meet world standards.
Lack of local IP
The consensus is that because of this legacy, local software developers could quickly develop expertise in many niche areas. However, this has not happened. Instead, much of the effort of the local IT industry is invested in reselling international products or providing bespoke solutions for local use.
In other words, there is very little generation of local intellectual property (IP) that could be the foundation of a knowledge or IP-based economy championed by the government.
If we have so much talent and skill in the country, what is the stumbling block?
Ironically, the feeling is that despite several initiatives ostensibly aimed at supporting the local software industry, government - or more accurately government legislation - is hampering progress.
If we have so much talent and skill in the country, what is the stumbling block?
Warwick Ashford, Senior technology journalist, ITWeb
Software development companies say while the government supports programmes to aid the innovation process, there is little or no help available in taking revenue-generating projects to offshore markets.
One of the biggest constraints seems to be financial exchange controls. Many say it is a source of great frustration that even if projects are successful offshore, it is difficult to bring money back into the country.
Another common complaint is the amount of money that has to be spent on getting advice from specialists on how to work within the complicated legal framework.
Some development companies say they have found themselves having to spend hundreds of thousands of rand on consultants for help around the complicated issues of IP, distribution agreements, reseller agreements and revenue flows before they had earned a cent offshore.
With the weakening of the US dollar, SA may have lost some of its appeal as an application development environment, but most still contend that local potential for generating IP continues to be as great as ever.
However, the message is clear that SA will never realise its potential as a source of IP or host country for outsourced call centres until the government makes the necessary legislative changes to open up the market.
Learning from others
Local software developers say the government should look to the proven models of India and Ireland where special tax incentives have been introduced, the necessary infrastructure has been created, and telecommunication costs are low enough to enable technology companies to create distributed service models internationally.
The bottom line seems to be that until the government makes significant changes to restrictive legislation around taxation, distribution, exchange, Internet trading and IP, the local software industry will be unable to realise its potential.
The relaxation of laws controlling the telecommunications industry that comes into effect in February 2005 was a good start, but it seems the government still has a long way to go before the process of achieving an IP-based economy can truly begin.
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