South Africa has been placed in the bottom of four categories on the Digital Evolution Index by the World Economic Forum (WEF).
This means that South Africa is displaying a low state and rate of digitisation, next to Peru, Pakistan, and Egypt.
The Digital Evolution Index looks at 60 different countries and ranks each country into one of four categories, including:
- Stand Out – Countries are highly digitally advanced and exhibit high momentum.
- Stall Out – Countries enjoy a high state of digital advancement while exhibiting slowing momentum.
- Break Out – Countries are low-scoring in their current states of digitalization but are evolving rapidly.
- Watch Out – Countries face significant challenges with their low state of digitalization and low momentum
South Africa has been placed on the “Watch Out” list – the category where countries may be moving backwards in terms of digitisation.
Businesses at risk of becoming irrelevant
After conducting a survey consisting of 329 interviews in 254 companies, software firm, Citrix South Africa, revealed that information and communications technology (ICT) is not a priority for South African business leaders.
The majority of respondents underestimated the value of technology, and 53% admitted that they were only interested in technology so long as it “kept the lights on”, and not for a competitive edge.
Brendan Mc Aravey, country manager at Citrix South Africa, believes that South African businesses have a choice.
“They can either invest in technology for the purpose of innovation rather than just operational efficiency, or they can opt to ignore the fact that digitisation is inevitable and continue on a path to global irrelevancy,” he said.
“The latter ultimately places companies at risk of technological devolution against more innovative competitors on a global scale. Investment in foundational technologies now may shift South Africa towards a more positive and productive future,” he added.
The research also showed that 56% of respondents believed that skills shortages was a barrier to technological improvements, yet only 25% of respondents were interested in hiring a Chief Digital Officer.
Tech start-ups not making the cut
Bradley Elliott, founder and managing director of digital agency Platinum Seed, is convinced, “The pace of digital innovation, outside of infrastructure and devices, is primarily down to the environment for tech start-ups”.
“While there are some fantastic tech start-ups coming out of SA, and what is a seemingly healthy environment, most of these are unlikely to reach the global status of their U.S, European, and Asian counterparts,” he added.
According to Elliott, this is because local investors are too focussed on the local market, rather than what they can achieve globally, and their conservative approach to investing doesn’t lead to real success.
“Even when a technology company has superior technology, it is difficult to sell into traditional businesses due to internal resistance to change, internal politics and procurement, and risk aversion to name a few factors,” Elliott said.
Elliott believes that these environmental barriers are the true reason South Africa has not progressed at an optimal rate of digital innovation.
Infrastructure hampering growth
The recent growth of fibre internet has predominantly taken over Cape Town, Gauteng and Johannesburg.
Jarryd Chatz, CEO of fibre company BitCo, said that fibre will become saturated in the metropolitan areas by 2020.
He believes that after this point, “Internet service providers will battle to provide fibre in rural areas and small towns, largely because of poor infrastructure and distances that need to be covered to reach users.”
The report on the Digital Evolution Index nonetheless remains optimistic about those who were placed on the “Watch Out” list.
“Some of these countries demonstrate remarkable creativity in the face of severe infrastructural gaps, institutional constraints, and low sophistication of consumer demand,” the report read.