Government initiatives to boost local ICT spend
News that the government is to commit itself to a strong and sustained capital spending programme over the next 10 years is going to have a major beneficial effect on the ICT industry in the long-term. This effect will be felt not only in telecommunications, but also in other areas of capital expenditure and outsourcing.
"The ANC Expanded Public Works Programme commits the government to spending R100 billion over the next 10 years on infrastructure such as roads, railways, telecommunications, health and energy. While it`s unclear how the state will finance this while maintaining conservative fiscal policies, there will be long-term benefits for the industry," says Victor Antezana, regional executive: business development for Business Connexion`s Johannesburg region.
"Infrastructure development of this nature has strong ICT components and, with the relative scarcity of skills, it should lead to further growth in outsourcing because of its high knowledge and skills base."
It will also increase the pressure on the ICT industry to continue to make progress with transformation and, Antezana expects, more major empowerment deals in the industry this year, particularly among the larger players.
"Companies who wish to take advantage of the government`s capital spending programme will need to demonstrate their empowerment credentials.
"Business Connexion is one of the largest empowered ICT companies in SA with revenues of over R3 billion a year. This means Business Connexion is in good shape for current and future contracts in both the government and private sectors," says Antezana.
The view for the industry in 2004 also looks reasonably positive with business expected to lift its ICT spending about 10% this year. Ongoing infrastructure spending in Africa, notably on telecommunications, will continue to provide fresh opportunities for SA ICT companies.
"While companies in export-oriented industries are having to cut costs because of the rand`s impact on their export earnings, the strength of the rand will encourage companies in other sectors to spend more vigorously as a result of the lower cost of imported capital components."
Looking further afield, South African companies will continue to make inroads as Africa`s ICT powerhouse. It is well positioned to contribute to the many infrastructure development projects taking place in Africa, notably in telecommunications.
"SA companies have the niche technical knowledge and the skills for these projects and are in many cases cheaper. SA could become for Africa what India has become to the US in ICT," concludes Antezana.