African knowledge economy needs ICT policy

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A solid policy framework for ICT is critical for a knowledge economy to be established in Africa, said MTN SA CEO Karel Pienaar.

Speaking at the inaugural ICT Indaba yesterday, Pienaar explained that a comprehensive policy environment is a critical success factor if Africa is to embrace the impact the knowledge economy can have on job creation and economic development.

He noted that five trends have emerged that will help drive growth towards the knowledge economy. “The rapid population growth will see the continent having almost two billion people by 2050. This will result in a younger population that is bolstering the middle class and already contributes significantly to consumer growth.”

The second trend is the move towards urbanisation, which will impact growth across the continent. It is estimated that the number of Africans who live in urban areas will grow from 40% to 60%, by 2050.

The third trend, according to Pienaar, is how Africa has been able to leapfrog technology. It has the fastest-growing telecommunications sector in the world, thanks mainly to the adoption of mobile technology.

Another trend is that, in addition to the continent's considerable precious and base metals wealth, it is also becoming an important player in the world's energy markets.

“The way the financial services sector is responding to the changing economic reality of the continent will be a key growth area,” explained Pienaar.

“While the majority of Africans remain unbanked, the growth projections for the sector are considerable. The expansion of financial services will create jobs, establish a formal identity of market participants, and provide greater safety than predominantly cash-based systems.”

Lion's share

Pienaar emphasised that a knowledge-based economy has several benefits for the continent, because - by embracing the knowledge economy - foreign direct investment will increase in technology, research and development, as well as infrastructure.

He also said the socio-economic advantages will result in improvements in the GDPs and income per capita of countries in Africa. The increased skills levels and employment capacity will improve the quality of life.

“However, the foundation to enabling a knowledge economy is a quality broadband infrastructure. According to the World Bank, every 10% incremental broadband penetration will result in a 1.38 percentage point GDP growth rate. This is consistent with the assessment of the GSM Association that reaching a 20% wireless broadband penetration rate in SA by 2015 will generate R72 billion incremental GDP and approximately 28 000 jobs in the ICT sector.”

In the same vein, delays in the rollout of broadband could result in thousands of jobs not being created and a significant negative impact on GDP.

"Mobile will be the key to delivering the lion's share of objectives. Also, investing in skills and education is essential. Incumbent operators need to participate in this and leverage existing infrastructure."

Spectrum fragmentation

Pienaar also said spectrum allocation needs to be done immediately and allocations must not be fragmented.

"Governments should not try to artificially increase competition through licensing. There are many examples in Europe of how this has not worked. Instead, they should facilitate e-skills, planning, and local content support. State-owned enterprises should be encouraged to tender with the private sector for ICT expansion initiatives.”

Operators have been waiting for a significantly long time for the Independent Communications Authority of SA to allocate high-demand spectrum in the 800MHz and 2.6GHz bands.

The inaugural ICT Indaba aims to formulate a continental agenda and approach to expanding the growth of the ICT sector.

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