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Is South Africa ready for the fourth industrial revolution?

SA, and possibly Cape Town in particular, can become Africa's Silicon Valley, but we need to create an eco-system of support for all internet of things start-ups.
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As a co-founder and shareholder in a start-up operation that recently ventured into the world of internet of things (IOT) and by extension the fourth industrial revolution (4IR), I felt overwhelmed by my lack of knowledge and understanding of what is actually our amazing technology-driven future.

However, I soon realised the more I immersed myself in the world of technology, the more it simplified itself. At the end of the day, the 4IR is simply using data to solve business or social challenges.

I would like to explain, by unpacking IOT, what it is and what it does. Firstly, IOT is defined as the interconnection of machines and devices through the internet or other communication networks, enabling the creation of data that can yield analytical insights for businesses, communities or governments.

In other words, it's the ability to take existing physical things like a fridge and place a device in it that sends temperature and location data via a communications network. This data is analysed and used to make critical business decisions, such as where to place fridges based on volume of product sold; for example, beer. This would be invaluable information for the product vendors – such as in the case of beer companies like AB InBev.

IOT, of all the emerging technologies, is projected to have the greatest impact on the industrial economy. McKinsey reports that if policy-makers and businesses get it right, linking the physical and digital worlds could generate up to $11.1 trillion a year in economic value by 2025.

IOT is further projected to boost corporate profits by 21% by 2022. More importantly, IOT is heralded as the foundational technology for breakthrough developments in artificial intelligence, robotics and other potentially broadly applicable advances.

Now that we understand what IOT is, the question remains as to whether South African businesses and government are ready to leapfrog the rest of the world in IOT adoption.

In my view, we are well poised to lead the 4IR, but some fundamental changes, both by the private and public sectors, will firstly be required.

IOT, of all the emerging technologies, is projected to have the greatest impact on the industrial economy.

On the side of business, rapid and varied use case adoption of IOT will yield the greatest savings and revenue growth. Big business in South Africa should use local solutions instead of importing solutions from India, China, or the US.

Our history of innovation includes Sasol, Thawte Technologies (Mark Shuttleworth) and even Elon Musk's PayPal, and needs to be nurtured and supported in SA as opposed to becoming icons of the US. The current movement to have a Start-up Act is an important development to foster further innovation and adoption of locally-produced IOT solutions.

It is important to remember that South Africa has a significant base of local innovation that requires financial and non-financial support through rapid prototyping centres like Gearbox in Kenya.

The centre allows for low-volume production of prototypes in a shared open collaboration space − just like shared office space, but specifically for IOT innovators. The equipment in such centres is state of the art and provided by private sector donors like Google, Amazon or IBM, and used by start-up IOT hardware companies to develop minimum viable products that are used to test or demonstrate the technology and also to raise capital to further develop a complete product. It's rather like first building a model of a car before you go into full-scale production.

On the side of government, the key to unlocking 4IR is policy certainty and communication spectrum. Affordable broadband communication, including 5G rollout, will result in greater use cases.

South Africa has already led the world in terms of 4G rollout and our large cellphone network operators will invest billions of rands to deploy 5G networks, placing South Africa among the first in the world to have a wide-scale 5G network.

Government incentives and funding support of early stage start-ups is another key element that requires a co-ordinated strategy with development finance institutions such as the IDC.

South Africa, and possibly Cape Town in particular, is more than capable of becoming Africa's Silicon Valley. We need to create an eco-system of support for all IOT start-ups, but possibly particularly those emanating from previously disadvantaged communities, that can work with hardware companies, communication platforms and data analysts, as well as venture capitalists to advance their solutions.

Another key aspect of mass adoption of IOT is skills, particularly in industrial design, graphic design, data analytics and application development. South Africa needs to equip and incentivise its youth, particularly those vulnerable to job losses due to automation and robotics, to re-invent their skills set.

More initiatives, such as the IDC's entrepreneurial development programme aimed at increasing the employability of South Africa's youth, are required. The IDC notes the plight of SA's youth, specifically the excessive levels of unemployment, as relentlessly in the spotlight. Dealing with it is deemed a national imperative. The IDC's approach to this challenge is anchored by three major pillars: education, work experience and entrepreneurial development.

While big business is helping − such as the New Skills for Youth programme, a $75 million, five-year, global initiative by JP Morgan designed to empower young people to acquire education and credentials − more incentives need to be in place to attract further private sector investment in such initiatives.

Ajay Lalu

Co-founder and director, Consumption Information Real Time (CIRT).

He is a certified IOT professional and chartered accountant who is a serial entrepreneur who has founded several successful companies, including the Black Lite Group. Lalu has showcased CIRT's solutions at the world's largest IOT conference, IOT Solutions World Congress, Barcelona, 2019, and regularly comments on technology developments.

A guest lecturer at the Gordon School of Business on digital innovation and strategy, he has been involved in technology innovation since 2018.

Lalu is committed to changing the lives of ordinary Africans through his involvement in various NGOs, such as Greenpeace Africa and the Distell Development Trust. He is greatly involved in initiatives aimed at developing SMMEs and tech start-ups, based on his life experiences.

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