Spectrum, digital migration can solve SA’s joblessness

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To reduce the climbing unemployment rate in SA, government is being urged to release spectrum and expedite digital migration.

The call to fast-track these government processes is among the raft of recommendations by commentators, who say the latest unemployment data released by Statistics SA this week is disastrous.

SA is lagging behind its peers on spectrum and digital migration due to scores of challenges that led to delays in two of government’s most important programmes of action, which many believe may bring economic prosperity and create employment opportunities.

Despite the slow pace, government acknowledges that expediting these vital undertakings will lead to high-speed internet access, which is a key enabler for inclusive economic growth.

This week, Statistics SA released unemployment data for July to September 2021 showing the country’s jobless rate rose to 34.9% in the third quarter of 2021, up from 34.4% in the second quarter.

In the third quarter, employment slumped by 660 000 to 14.2 million and the labour force plunged by 842 000 to 21.9 million.

This, according to analysts, is the highest since comparable data began in 2008, and was prompted by the July unrest and stringent COVID-19 lockdown measures.

Reaction from politicians and analysts was swift, with some tabling possible solutions to unlocking employment opportunities.

John Steenhuisen, leader of the opposition, the Democratic Alliance, wrote in his Straight Talk newsletter: “Here is what we need to do to fix this jobs and humanitarian crisis. Enable cheap data by removing obstacles to digital migration and spectrum auction.”

This recommendation was among the 16 possible solutions Steenhuisen offered to stop the growing scourge of joblessness.

“Permanent further spectrum allocations would go a long way in helping to reduce the cost of providing mobile data and the overall adoption of digital services,” says Peter Takaendesa, head of equities at Mergence investment Managers.

“The related mobile networks growth and digital services adoption could drive direct and indirect job creation over time.

“Many industries will continue to digitise and it will be a mix of further growth in existing online business models in the broader e-commerce segment (e-tailers, online education, digital payments, etc) and there will be other new business models that we do not know of yet,” he notes.

“Countries that will lead the value creation in these digital services are likely to continue to grow faster than those that will remain reliant on older primary industries, although the primary industries (agriculture, etc) will still remain very important.”

Takaendesa believes the new minister of communications and digital technologies, Khumbudzo Ntshavheni, is on track to deliver on the acceleration of the digital migration process, as well as targeting the spectrum auction for 2022.

Expect price cuts, not jobs

However, some analysts like Ofentse Dazela, director for pricing research at Africa Analysis, are not convinced that expediting these two priorities will lead to job creation, but agrees they will lead to economic development.

“There is a narrative out there that the assignment of permanent high-demand spectrum to telecoms companies will somehow revive the job market in SA; I don’t think this is likely to be the case.

“My view is that the assignment of additional spectrum will only bring certainty to mobile operators in terms of planning, and we will probably also see these operators becoming more efficient and committing less capital expenditure for network rollout and optimisation in the future,” he says.

“In reality, the allocation of additional spectrum in the 700MHz, 800MHz, 2.3GHz, 2.6GHz and 3.5GHz bands only paves the way for a more price-competitive telecoms sector, with competition expected to shift towards quality of services provided.

“Thus, in the short- to medium-term, people will benefit from newly-assigned spectrum resource in the form of low prices and not necessarily jobs.

“Importantly, the digital migration process must be completed as soon as possible, so that spectrum that is currently utilised by broadcasters can be re-assigned to mobile operators. If this process is stalled further, then operators will not have sufficient spectrum to rollout the type of high-speed broadband solutions consumers need.”

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