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What Tito Mboweni's appointment means for ICT

Simnikiwe Mzekandaba
By Simnikiwe Mzekandaba, IT in government editor
Johannesburg, 10 Oct 2018
Tito Mboweni has been appointed as SA's new finance minister. (Photo source: WEF)
Tito Mboweni has been appointed as SA's new finance minister. (Photo source: WEF)

While Tito Mboweni's appointment as South Africa's new finance minister bodes well for the markets and investor confidence, analysts are on the fence on its impact for the ICT sector, especially considering the looming general elections.

Mboweni, a former minister and South African Reserve Bank governor, has replaced Nhlanhla Nene, who resigned amid revelations that he lied about his meetings with the infamous Gupta family.

The new finance minister's appointment comes at a time when the South African government has unveiled an economic stimulus and recovery plan, with the ICT sector at the forefront.

Last month, president Cyril Ramaphosa revealed government is determined that the ICT sector be an integral part of the investment drive to attract $100 billion in new investment in the country over the next five years.

The president's sentiments have been echoed by Siyabonga Cwele, minister in the telecoms and postal services department, who says the administration is seeking investment in network infrastructure, data centres, local manufacturing of equipment and innovation centres.

Minimal impact for ICT?

Mark Walker, associate vice-president for Sub-Saharan Africa at IDC, says Mboweni's appointment as finance minister will likely result in an improvement in the rand and US dollar (USD) exchange rate.

If sustained and continued over the next six to 12 months, he notes, it will ease cost pressures on ICT buyers as most of their purchases are based on USD supplier pricing. "This would be positive. This improvement must be sustained, otherwise the impact is lost."

However, Walker points out that given the short period of eight months before the national elections, his new role can largely be seen as a placeholder to bolster market confidence rather than to implement sweeping changes to the national fiscus or budget.

"This implies a very minimal impact on the ICT sector. [I] don't see any sudden significant reallocations of budget to the plans minister Cwele refers to other than what has already been set aside in current budget cycles.

"Should his role not be replaced after the elections, then hopefully the plans that minister Cwele has outlined will enjoy greater prominence in this budget allocation, which would augur well for the ICT sector as it tackles issues around access to ICT services in the longer term."

Adrian Schofield, ICT veteran and programme consultant at IITPSA, shares similar sentiments.

"Although the president has indicated the government will increase its focus on the enabling effect of ICTs, I would not say the new minister of finance will have a direct impact on the sector.

"In general terms, what is good for the overall economy is good for the ICT sector, as its products and services are integral to most aspects of life in the 21st century."

Overall, Schofield believes the choice of Mboweni as minister of finance is a good one.

"If he [Mboweni] and the president work together to turn promises into reality, then South Africa will become more investor-friendly.

"However, the government of this country is not a one- or two-man show; we need to have a team of ministers demonstrating they have committed themselves to a new culture of ethical service and they are inculcating that culture throughout the departments they lead. Only then will we be able to build some real momentum towards growth."

Investment priorities

In light of Ramaphosa's messages on investment and Mboweni's appointment, the development of communications infrastructure is expected to be one of the priorities for government.

So says Naila Govan-Vassen, senior ICT industry analyst at Frost & Sullivan, noting that while there is government will, the key question still centres on the urgency towards all these developments.

Govan-Vassen points out that the South African government "still needs to finalise the digital migration process, release spectrum and determine how SA Connect will pave the way to bridge the digital gap".

For the ICT sector, Cwele has said the focus on investment is network infrastructure expansion through SA Connect and the wholesale open access network, data centres, increasing the manufacturing and production of local goods, and skills development for the knowledge economy.

This, he believes, will go a long way in the country's efforts to spur economic growth. "South Africa is open to investment. We would like more investment in the South African economy and every investment counts."

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