By Takalani Malivha
The Fourth Industrial Revolution is upon us and institutions are positioning themselves to participate and lead their industries in the deployment of 4IR technology. The definition of this industrial revolution is not quite set in stone and the technologies associated with it are moving targets whose true value will reveal themselves to us as we explore them. However, the 4IR can be broadly defined as an integration of faster, efficient and intelligent technologies.
Undeniably, the 4IR has propelled the digital economy and early adaptors are setting themselves up to reap the dividends. There is a handful of large commercial companies that adopted and scaled 4IR technology and thus positioned themselves as leaders in the field. Many have relied on data (personal and otherwise) to build better products, increase efficiencies in their businesses and train models that can predict patterns. Although access to large amounts of data is at the heart of various 4IR success stories, what sets businesses apart is looking beneath the hood to uncover industry specific levers that will create valuable change.
On the up and up
Adopting 4IR technology is no small task and businesses site skills, understanding and use case relevance as some of the barriers between preventing them from adopting smart technology. Consequently, large businesses that have the mileage to research, test and deploy quickly have taken the lead. However, and as demonstrated below, the gap between consideration and adoption is still wide even for businesses that have begun proclaiming the potential and power of smart technologies.
Medium and small-sized companies can also be positioned to take up smart technologies. They are often looking to scale, have room to alter business models and can expand their customer base more comfortably by improving their product or service offering. Within these companies also lies an opportunity to demonstrate the transformative power of smart technologies that are often spoken of but not taken up by many.
Multiple industries-and companies in particular-have existing data that if used can empirically reveal why a company experienced success or failure. With data, a company can shift from building a customer base that increases the odds of conversion to creating more opportunities to establish client relationships. The mobile phone, a device that is common amongst customers, has also become a complimentary device to data, innovation and work overall. The availability of the mobile phone makes the internet of things (IoT) more feasible for businesses. IoT allows businesses to monitor the lifecycle of their products and impact of their services beyond the checkout point.
4IR has gifted us technologies that enable businesses to automate forward, so that employees are gradually freed up to tackle waste as well as idle value income streams. Additionally, automated processes can introduce reputable consistency and avail resources to better understand complex markets.
Pathways to implementation
For the most part, existing computer hardware can set a company on the path to integrating these technologies. In most instances, the relevant software might not be as accessible at first. A practical approach in such a case would be to collaborate, within reason, with software as a service (SaaS) providers . Such organizations can advise on the best software to use for medium and small size businesses that have plans to expand in the future. It might soon become detrimental and costly to rely on legacy software and thus, collaborators can assist with the much-needed transition into improved smart technologies of the fourth industrial revolution.
Smart technologies require skilled individuals that South Africa is not currently in abundant supply of. The scarcity has made 4IR skills pricey and understandably, it might not make business sense to invest in skills before a process is established and proven to be successful. It can be valuable to contract a trusted advisor in the field of emerging technologies who can go through industry-specific use cases that can bring in tremendous understanding of the current landscape.
The subsequent hire following the intervention of an industry expert can then be a specialist in the relevant smart technology that will be deployed in the company. There is often a host of consultants that can help with the initial heavy lifting and this can allow the internal hire to focus on getting domain knowledge that will be valuable when hiring more specialists and upskilling current employees. Ultimately, company hires will move from an I-shaped structure to a comb-shaped organization where specialists build on the know-how of current employees to create a path to specialization for more. This method can help businesses adopt smart technologies more sustainably, create a path to growth and ultimately encourage agility.
Source: DevOps Institute
It cannot be emphasized enough that leaders in business need to be aware of the bias and inferences that are inherent in how they source, classify and use their data. Moreover, leaders should take care to set boundaries that are relevant for the world in which their products and services will encounter. Left to its own devices, technology can innovate to dangerous territory with consequences that it has not been exposed to. Additionally, those at the forefront of the 4IR have gone ahead of digital regulation and established their own ethical barometer on how these technologies are used. These companies are cautionary tales and can act as case studies on how to better interact with pervasive 4IR technologies.
The History of Industrial Revolutions
We are currently in the initial phase of the fourth industrial revolution. The world has witnessed three industrial revolutions over the past 250 years.
Industrial revolutions usher in major socio-economic shifts. The first industrial revolution started in the late eighteenth century with the use of steam to power different processes. Prior to this revolution human and animal power was used for production. One of the major inventions, which symbolises this revolution, is the steam engine. Steam power was also used for driving weaving mills etc. This led to increased and localised production in factories. Due to industrialisation, there was an effect on the social structure. People started moving from villages to the cities where industries were located. We were slowly moving away from an agriculture-based society to an industry-based society. The first industrial revolution emerged in England, spreading to different parts of the world over the course of a century.
The second industrial revolution took place approximately a century after the first. A key driver of this revolution was the invention of electricity. During the second industrial revolution, steam power was replaced by electric power. Slowly, electricity began to replace steam in industrial production. Another major invention was that of electric motors, which led to assembly lines and mass production. The invention of electricity changed society in a significant way, giving people the possibility of social and economic lives, after sunset. possible to have social activities even after sunset.
The third industrial revolution started in the second half of the twentieth century. Igniting this revolution was the advancement in the semiconductor industry. Transistors were invented in 1947 at the Bell labs in the United States of America (USA). The invention of transistors made it possible to digitise and therefore and store information easily. This revolution also saw the advent of computers leading to the automation of industries, thus increasing the production and efficiency. Another important invention of the third industrial revolution was the Internet, which resulted in worldwide virtual connection.
The fourth industrial revolution is not simply an extension of the third industrial revolution with increases in computing power and better connectivity. Of importance to understand is that the fourth industrial revolution is a result of the confluence of multiple technologies, which have previously existed in isolation. For this reason, the 4IR is characterised as the union of the digital, physical and biological worlds.
The Socio-Economy in Historical Context
Undoubtedly, the 4IR represents an opportunity to place South Africa in a leadership role, casting behind a history of exploitation and exclusion. To achieve this, we must develop a deep understanding of our past, recognising that it is not a failure of human capabilities but rather a clash in economic and social value systems that resulted in grossly unequal outcomes.
Indeed, scholarly accounts of the nature, origins, and impact of industrial change in Africa often begin with the emergence of British industrialisation in the latter part of the 18th century and into the 19th century (de la Escosura, 2004; Harvie, Martin, and Scharf, 1970; Hopkins, 2000). In an attempt to explain more recent examples of rapid industrial development and socio-economic change, the focus has shifted from the European (and mainly British) cases to the East Asian examples (see Evans, 1998; Gareth, 2010; Kay, 2010; Sugihara, 2007). Within this context, considerations of the economic profile of various parts of Africa (and other regions that were colonised) are eclipsed save only to highlight the extent of Europe’s (or Asian Tigers’) relative economic and industrial advancement during the same time period. Not only this, but the story of industrialisation or that of emergent economic organisation beyond sole reliance on agriculture tends also to pivot towards European intervention in African society and economy rather than endogenous developments (see for example Fine and Rustomjee, 1996; Marks and Rathbone, 1982).
In recent years, studies on the Kingdom of Mapungubwe (c.1075–1220) have shifted away from the mainly archaeological, geological, and environmental to the construction of a narrative around the Kingdom’s socio-cultural legacy in Southern Africa. Notably in South Africa, the discursive (re)construction of Mapungubwe (Carruthers, 2006; Chirikure, Schoeman, Hay, & Browne, 2015; Pikirayi, 2009) has come to serve a number of politically and culturally justifiable ends central to which the kingdom’s technical capability in mineral extraction have been highlighted (Chirikure, 2007) as well as Africa’s self-directed insertion into global trade networks across the Indian (and Atlantic) Ocean world (Pwiti, 1991; Reid and Segobye, 2000; Wood, 2000).
Mapungubwe was a precolonial Southern-African state located at the regional confluence of present-day South Africa, Botswana, Zimbabwe, and Mozambique. At its height, the kingdom had a population of 5000 people and was organised around a class-based social order due, in part, to political-elites’ access to and control over gold and ivory trade (Huffman, 2008). Although initially a trade good along the East coast of Africa, over time gold assumed important symbolic value within Mapungubwe society itself, replacing the centrality of cattle as the principal marker of wealth and status (Woodborne, Pienaar, and Tiley-Nel, 2009).
Therefore, central to the evaluation of history is an appreciation of the distinction between industrialisation and industrial capabilities. What this section surfaces is the fact that science and the attendant industrial capabilities it produces were not limited to 16th century Europe. Indeed, at the intersection of modern-day Zimbabwe, Botswana and South Africa, existed an advanced civilisation, Mapungubwe, which contained within it industrial capabilities and international trade sophistication in as early a time as the 12th century.
The below timeline contextualises Africa’s industrial capabilities starting 1000 BC.
South Africa’s current position then as a developing nation, in spite of Mapungubwe, reveals the important, arguably missing, linkage between scientific and industrial capabilities and capital accumulation. Thus, in contemplating South Africa’s development outlook in the 4IR, we seek to understand the kind of balance that must be struck between science and capital in order to produce economic competitiveness and societal wellbeing.
By Kendal Makgamathe
Like most kids who grew up in a township in the 90s, Mxolisi Xaba spent his days after school, honing his skills as a gamer. If it wasn’t feeding coin after coin into a hungry slot in an arcade game, it was swooping on his opponents ‘cows’ in a game of Morabaraba. Little did he know then, that the countless 50 cent coins and hours that he whiled away at Mampuru Hall in Dube, Soweto would end up laying the foundation for his career as a game developer, UX designer and digital entrepreneur. Back then, when he was first exposed to the world of games, it was a communal experience. Friends would go to the ‘shops’ together to play games or they would meet there to try and at least get in a few games before the local champion showed up. There was always that one guy who had the High score that everyone else tried to beat; the guy who would arrive with just two or three 50 cent pieces yet would play the game the longest as one after the other of would-be challengers stepped up to the controls. Each contender trying to knock him off his perch merely funding his afternoon of diversion as he pulled trick move after trick move, blowing everyone away, building up a following of admirers with some even a little envious of his prowess.
And then came TV games. Then instead of gathering at an arcade, the games were then being played at home. So, games went from being communal to being more private. Even then, friends and cousins were invited over to play but interest in outdoor games and activities started waning. Kids stopped making and flying kites, playing with tops and marbles. Thus, it was, that the modern gamer was born, tucked away in their parents’ lounge, or in their own bedroom, the gamer world became smaller and more private and less and less involved with outsiders and outdoor games.
With this as a background it is little wonder, then, that Mxolisi would find himself, thinking about and working on the game mechanics for a Video game called, “Teka Champs”, less than 10 years after finishing school. Led by founder and CEO of AFROES Transformational Games, Anne Githuku-Shongwe, the game which was her response to what she saw as the dearth of positive messaging in the games of the day. She premised the game on several different African footballer’s narratives, looking at their journey to stardom and global sporting domination. Mxolisi’s old game experience came into play as he applied the principles of, “Ping Pong” an old computer game, to introduce a logical game design that was true to life in terms of skills sets that players would have, dependent on the position they played in the team. His time spent as a gallery curator after graduating with a BTech Fine Arts from TUT also allowing him to apply an approach that was both methodical and which also made for interesting game play.
The positive response to this, the first game he had ever worked on, gave him the validation that he needed and he remained in the gaming space as AFROES decided that Social Impact Games were the chosen path of development. At first planning on developing for release on Sony XBOX, they quickly realised that a shift to mobile based games from the traditional console and video games was imminent as access to smartphones increased. Coupled with decreasing data costs and improved connectivity to the internet, a new market of gamers was suddenly emerging. It was during this phase of transition from console-based development that AFROES stumbled on an opportunity of a lifetime. Having developed “Haku 1”, a game for the Kenyan market, they released it on a global platform. Much to their surprise they found that while the numbers locally, in Kenya were sub-par, in Indonesia, the game had garnered over the same period, over 150 000 downloads!
Not being prepared for it and lacking at the time, the know-how on how to the potential windfall, it became an opportunity lost and a source of deep insight and introspection. The upshot of it was a clear understanding that for Gaming to succeed on the continent the reach had to be further than a region or a country – it had to be at the aimed at the entire continent. Which is exactly what Mxolisi and AFROES have been doing since then – creating content that targets the entire continent and brokering access to skills and talent from the across Africa for clients. Right now, there is a budding alliance of gamers that spans from South to East and West Africa. Gamers, developers and promoters of gaming events and E-sports tournaments from Kenya, Nigeria, South Africa and Zimbabwe work closely together creating access to markets and opportunities. Creating distribution networks to allow the developers to generate sufficient income to survive, is but one of their endeavours that underpins their efforts to foster common purpose for themselves. A common story amongst them is that the great majority of Game developers moonlight after hours and on weekends in order for them to feed their passion, which is gaming and producing their own games.
Coming back to South Africa, Mxolisi’s story is by no means unique. Neither are the industry demographics nor the revenue split. Described as white, male and Cape Town based, the local Gaming industry has also been likened to South Africa’s untransformed film industry 20 years ago. That our TV and Film industry is flourishing, producing content that is acclaimed worldwide, in recent years, speaks volumes of what transformation and inclusivity will do for Gaming. The South African Cultural Observatory refers to a finding made by Make Games SA Founder and CEO, Nick Hall, that in 2017, of the approximately 11 million gamers in South Africa: 78% of them are black; 8% coloured; 3% Indian and 11% white.. These gamers power an industry that is valued at R3,5 Billion and expected to rise to R5,4 Billion by 2023. This fast growing, yet still niche, industry is could very likely be Africa’s next Content Creation Frontier.
It is clear that we have not fully tapped into the possibilities of what can be done in terms of the South African, let alone the continent-wide Gaming industry. That it is almost exclusively a male experience, is just as evident. With so much potential, there need to be interventions to help build the industry and keep the likes of Mxolisi engaged in gaming, both as developers and as gamers. To encourage those with interest and skills to stay in the industry, acting as torchbearers for those that come after, they need to be incentivised. Structures and processes should be put in place to assist them in going to market. Business skills and support need to be part of the armoury of any developer. Access to other ancillary skills required to build a business, create and test product is just as important. By building the marketplace where gamers, developers get to meet and interact, it creates an outlet for creativity and innovation. The interest and drive to make it in the gaming industry exists as is evidenced by the tenacity shown by Mxolisi and many others like him. Removing the need to focus on non-essential elements like food and shelter, the developers can just focus on what they are good at – developing games.
A second intervention, which is just as important as the first one, is to encourage skills acquisition through a services industry approach. Through working on games or elements of games commissioned by a Top Gaming company from the west, the developers get to hone their skills even as they earn income through servicing the global industry. These are but two possible ways in which the growth of the industry can be curated, nurtured and guided, possibly even impacting on the growth forecast for the industry – from an impressive 9% to a whopping 15 or even 20%.
Developers like Mxolisi Xaba form part of the bedrock of South Africa’s gaming industry. They have been in the trenches, designing, creating and coding games for a decade. They have made mistakes, missed opportunities, gained invaluable insights, grown networks that stretch across the continent. Created games that resonate with gamers halfway around the world and continue to shape this new frontier in the tech and digital innovation space that is Gaming. They deserve to know that it has not all been in vain and that they do not have to chip away at the rock face alone anymore. Their efforts are appreciated and help is on the way.
 South African Cultural Observatory (2019) Unlocking the growth potential of the online gaming industry in South Africa: Challenges and Opportunities, https://www.southafricanculturalobservatory.org.za/download/458/d07e70efcfab08731a97e7b91be644de/Unlocking+the+growth+potential+of+the+online+gaming+industry+in+South+Africa%3A+Challenges+and+Opportunities
 Statista.com, Value of the video games market in South Africa from 2014 to 2023 (in million South African rand), https://www.statista.com/statistics/517310/south-africa-video-games-market-value/
Digital puts one in three jobs at risk
The best thing the cave people did was leave the cave. Technology helped them take that step. Today the possibilities created by technology continue to be felt in every sphere of business and life. Its artefacts, from fire to forks to Facebook and machine learning algorithms, have catapulted humanity from Stone Age to phone age to drone age. We can now solve some of the world’s most intractable problems and finally make significant progress in reducing our usage of our planet’s capital for our living expenses, as economists encouraged us to do over 100 years ago. But technology’s ability to release humans from much physical drudgery is also the source of much fear and anxiety.
John Maynard Keynes predicted this day would come in his 1930 lecture “Economic possibilities for our
grandchildren”. He suggested then that mankind will solve its most pressing economic problem, one that we have been steadily solving since we walked this planet, namely ‘the struggle for subsistence’. Machines will help us produce enough for our needs. But we open Pandora’s box because, as Keynes argued then, solving the economic problem is coupled to a second problem, namely ‘technological unemployment’— ‘unemployment due to our discovery of means of economising the use of labour outrunning the pace at which we can find new uses for labour’. We are producing more and more (products and services) with less and less need for intervention.
What options are open to us?
Job transition is not new. In the pursuit of higher productivity at lower cost options, jobs have for many years been shed. In recent times, many manufacturing and standard business process intensive jobs were outsourced to countries where labour was cheaper. Those jobs rarely made it back to home soil but at least labour in outsource recipient countries benefitted from the employment opportunities created there. Today, the same phenomenon occurs. But now, the search for labour arbitrage is no longer between physical geographies; today, jobs are lost to the digital world and will, in all probability, never to be done by humans again.
The loss of jobs creates an even bigger problem. Machines do not consume things. Machines do not buy things.
So, while machines can replace human work, they do not drive purchasing power and consumption or GDP as humans do. Humans work. Humans get paid. Humans spend. Humans consume. Society progresses. Humans don’t work. Don’t get paid, can’t spend or consume (much). Society regresses.
While the steady march of progress inevitably spells more and more machine augmentation, allowing humans to
use their time, energy and creativity differently, we are ill prepared for its consequences. Labour is still a major
economic growth driver. Jobs remain the primary mechanism of distributing income and providing humans with
access to the economy. This is especially true in emerging markets—like South Africa—where poverty remains a
problem, rates of unemployment are high and the social security blanket is thin.
There is an answer Instead of being replaced by machines, humans must learn to collaborate with machines to enhance their own productivity and ingenuity. We must learn to ‘run with the machine’.
JOBS AT RISK IN SOUTH AFRICA
South Africa has made good headway in terms of adopting digital, however, the growing maturity of its digital economy has yet to translate into significant growth, especially for labour.
While it scores well in terms of digital competitiveness compared to its emerging market peers (Figure 1) and its demographics—50 percent of the population is under 30 years old—are well suited to the demands of a digitally-driven economy (Figure 2), South Africa’s economy remains weak. Population growth has overtaken GDP growth (Figure 3). Labour and income growth are declining (Figure 4) while unemployment (now at 28 percent), and especially youth unemployment (at 36%), is high. Jobless youth make up 75 percent of the unemployed.
Figure 1: South Africa is ahead in terms of adopting digital
Figure 2: Almost 50 percent of the population is under 30 years old
Figure 3: Population growth has overtaken GDP growth
Figure 4: South Africa – household disposable income and unemployment rate
Until now, digital technologies have been deployed to work alongside people and automation has occurred
only in isolated cases. Now, as digital technologies advance, the threat of automation grows. It will eliminate
a broad swath of jobs across the economy, aggravating the risk of unemployment. And, as digital technologies become ever more sophisticated, more waves of job displacement will almost certainly occur. It is a distressing picture.
To quantify the size of the challenge, Accenture commissioned South Africa-specific research. The result: 35 percent of all jobs in South Africa are currently at risk of total automation— i.e. machines can perform 75 percent of the activities that make up these jobs. The threat is significantly higher in South Africa than in more advanced economies such as Germany (24 percent), and second only to Brazil (46 percent) in this study (Figure 5).
Fully understanding the risk
For the study, Accenture Research developed an econometric model using labour data from Statistics South
Africa (Stats SA)4 to gain insights beyond just the job categories at risk. To fully understand the risk, it identified
the share of job activities in each category that can be automated.
Human-like (analytical, leadership, social intelligence, creativity) and machine-like activities (routine work,
transactions, manual work) were allocated across professions and adjusted based on local South African statistics, including type of work, skills and tasks, the recent skills evolution in jobs, degree of work automation, work supply demographics and productive structure.
The results clearly show that occupations that allocate more time to human-like activities have a lower probability of automation, while workers involved in occupations such as production, office administration, farming, food preparation, construction, mining, transportation, installation and maintenance are at highest risk.
For South Africa, initial findings show that 35 percent of all jobs in South Africa are currently at risk of total automation. By 2025, this will reduce to 20 percent as workforces evolve with new digital demands across
Figure 5: Jobs with risk of automation by country
Which jobs are at risk?
Both white – and blue-collar jobs are at risk (Figure 6).
The more predictable and repetitive the activities that make up the task, the more likely it is to be replicated by machines … and automated. The jobs of clerks, cashiers, tellers, construction-, mining- and maintenance workers all fall into this category.
The more intensive the use of human-like skills to perform a task, the less likely it is to be automated. Jobs with less than 25 percent of risk of automation will comfortably ‘run with the machine’. Hard-to-automate jobs include tasks like influencing people, teaching people, programming, real-time discussions, advising people, negotiating
and cooperating with co-workers.
Figure 6: Top 10 jobs at risk in South Africa
Clearly, the threat that automation and the growing sophistication of digital technology (e.g., AI) poses to jobs in
South Africa will add considerable stress on an already pressured economy. But there are also answers and a significant incentive to act now. Digital—a growth multiplier Digital technologies will usher in a new economic era—they overcome the physical limitations of capital and labour, exposing new sources of value and growth, increasing efficiency and driving competitiveness. Without these technologies, companies will lose market share and be left behind, and economies will stagnate. The opportunity for South Africa is considerable.
Accenture Research shows that one major digital technology, artificial intelligence (AI), has the potential to boost labour productivity in countries by up to 40 percent by 2035 as innovative technologies enable people to make better use of their time. By embedding AI and making it a factor of production, this research indicates that South Africa could potentially double the size of its economy five years earlier.
To rise to this challenge, South Africa will need to recalibrate its economy and its workforce for digital, developing
an environment in which humans and machines work together to engage with customers, and create entirely new products, services and markets. This will drive demand and consumption within the economy, boosting growth.
The foundations are in place. With a strong digital economy in the making and the right demographics, South
Africa has the tools to stimulate economic growth and reduce the number of jobs at risk. But, to be effective, the key intervention— increasing the pace at which the workforce acquires the skills essential to maximise the benefits of human-machine collaboration—must start now.
The research indicates that at its current rate of learning, South Africa will shift to ‘running-with-the-machine’ activities (those that that require more human-like skills) slower than other developed countries. However, by reallocating skills and doubling the pace at which its workforce acquires relevant skills, South Africa can reshape work and activities such that the share of jobs at risk of being fully automated reduce from 35 percent (5.7 million jobs) to 14 percent (2.5 million jobs) by 2025 (Figure 5). This intervention equates to reducing the risk of automation for an additional one million jobs.
Figure 7: Doubling the pace of learning will reduce jobs at risk of automation in South Africa from 35 percent to 14 percent by 2015
INTRODUCING NEW SKILLS
Human beings have an amazing capacity to learn new skills and adapt to new environments. This is true not only in early life, but throughout our lives. As the nature of work evolves—i.e., becoming more digital and human, cooperative and collaborative, knowledge and taskbased, flexible and fluid—employees and entrepreneurs will need to adapt their mix of skills and knowledge to embrace new challenges and stay relevant.
In addition to a big data analysis of in-demand skill trends, a review of skill frameworks and a landscape
scan of 1,000 workforce development programmes, Accenture interviewed experts from a wide variety of fields, from neuroscience and corporate learning to education and workforce development. We then used these insights to help identify and categorise both the universal skill families and the underlying cognitive capabilities needed for inclusion in the digital economy. We call the resulting taxonomy ‘New Skills Now,’ and the six skills families that underpin it are: Learn to Earn, Build Tech Know-How, Apply We’Q, Create and Solve, Cultivate a Growth Mindset and Specialise for Work (Figure 8).
Figure 8: The New Skills Now Taxonomy, Accenture
RESPONSIVE, RESPONSIBLE AND RESPONSE-ABLED LEADERSHIP IS CRUCIAL
If our challenge is securing economic growth for South Africans through the provision of access to, and participation in the economy without compromisingglobal competitiveness and the productivity that comes from digital technologies, multi-stakeholder leadership and collaboration is our collective crisis.
To avoid any stakeholder feeling coerced into investing into longer-term shared economic growth while
potentially compromising short-term efficiency gains, a new model of co-operation is needed. Such a model will
involve multiple ecosystem stakeholders and will shift the current paradigm from doing well or doing good to doing well and doing good.
A clear collaborative multi-stakeholder approach is needed.
Government needs to be at the forefront of creating opportunities for its citizens to access digital technologies
across areas such as infrastructure, connectivity, skills, incentives, policy frameworks and regulation. It must also set policy to regulate action across areas where the digital revolution is likely to have the most impact. Key areas will include eCommerce, cybersecurity, digital healthcare, the creation of a digital society (e.g., regulate more stringently the cost of data, which is in enabler), driving the acquisition of digital skills, and service provision.
South Africa talked about The Social Plan14 in the late nineties and early 2000s when retrenchments were rife.
Attempts to implement it were not very successful. Today an opportunity exists to revisit the concept of a Social
Plan and re-design it to take advantage of technology advances, as well as expand it to reach across more than one generation in a family or community.
Corporate South Africa
Large corporates have pivotal roles to play in attaining South Africa’s shared economic future. In addition to
preparing their organisations to take advantage of the benefits of digital technologies, businesses should also work at using technology to enhance growth beyond achieving efficiencies.
Corporates can allay fears of job losses by committing to:
- Creating job alternatives through reskilling initiatives
- Communicating transparently and honestly and engaging with employees and other stakeholders
- Taking all impacted parties along on the journey
Organised labour needs to accept that digital technologies bring the potential for economic growth and global
competitiveness. The course of the digital revolution cannot be changed but it can be smartly managed.
The United Association of South Africa (UASA) talks about South Africa’s future workforce needing to align its skillset to keep pace with developments. Organised labour plays an important role in preparing the next generation of workers to contribute meaningfully to inclusive growth and economic transformation.
Institutions of Learning
Institutions of learning have to pivot too.
According to Edgar Morin, the French philosopher and sociologist15, we need new systems of learning for both what and how we learn across organisations, governments, non-governmental organisations and institutions of
research and education. Morin argues that the education of the future should be such that ‘we are better able to
grasp realities and problems which are ever more global, transversal, polydisciplinary and planetary’.
Prof. Tshilidzi Marwala, Vice-Chancellor and Principal of the University of Johannesburg talks about multidisciplinary education being the way to go in preparing for the workforce of the future. He states that we will need graduates who are innovative, internationally oriented and have strong problem solving capabilities. Scientists need to have soft skills and social science and humanities students will need to have technical skills.
Industry associations need to lead the discussions, keep abreast of research, do
research of their own and continue to drive engagement and conversation on
matters of change.
Advances in technology have changed the nature of work since time immemorial. In the times of the first Industrial Revolution, things got worse before they got better. In Britain, the Luddites, a group of skilled artisans (textile workers and weavers) destroyed machinery in textile mills as a form of protest against machines taking their jobs. Out of that era came secondary and tertiary education, the minimum wage, bans on child labour and major public health advances, from vaccinations to sanitation. It was both the best of times and the worst of times as Dickens wrote. It’s time to change again.
The adjustments we require in this era will be equally large and will additionally require both economic focus and political attention. We’ve seen the harsh beginnings of this in the United States, with Brexit in Europe, with the ‘Arab Spring’ and, in South Africa, with Marikana and the “fees must fall” protests. Anger about inequality and social and economic exclusion is brewing under the surface.
While Luddites still live among us, we have to resolve the jobs debate in a way that does not impact our competitiveness. Keeping machines at bay would, as University of Oxford professor Luciano Floridi indicates, “damage technological innovation and fail to improve the human condition”.
This period of ‘maladjustment’, where new uses for labour are still somewhat illusory, is temporary.There are many questions. Will there be enough jobs to fill our time? Will working for money be replaced by working for meaning? In the future, will jobs be fewer and work weeks shorter, and will jobs be shared? The answers are already apparent. We will find new jobs. We will not only do things differently, we will do different things. New industries will emerge. But the future trajectory of countries will, by and large, be determined by how they ensure economic access for all to build a consumer class with the purchasing power to spend on the goods and services that businesses produce with the aid of machines.
Accenture is a leading global professional services company, providing a broad range of services and solutions in strategy, consulting, digital, technology and operations. Combining unmatched experience and specialised skills across more than 40 industries and all business functions—underpinned by the world’s largest delivery network—Accenture works at the intersection of business and technology to help clients improve their performance and create sustainable value for their stakeholders. With more than 435,000 people serving clients in more than 120 countries, Accenture drives innovation to improve the way the world works and lives. Visit us at www.accenture.co.za
By Ayabonga Cawe
WE HAVE TO CONSIDER HOW INNOVATION CAN BE ENCOURAGED AT A LOCAL LEVEL
Innovation and Economic Change
One of the most central ideas that have emerged in economic thinking in the last few decades has been the recognition of the role of ‘innovation’ in the long run technical change that is a feature of all economies. The cyclical nature of such change and its impact on an economy’s ‘boom bust’ cycles formed the basis of much of the work of economist Joseph Schumpeter. Schumpeter argued that innovation not only gave firms cost, quality and price advantages that made them more profitable, but also expanded the productive potential and possibilities of society as a whole.
To apply Schumpeter’s intellectual advance to the context of 21st century South Africa, is to recognize that many of the ‘structural constraints’ to prosperity (however this is defined), have to do in the contemporary era, with differential access to knowledge, information, technology and capital. This makes the task of not only responding to technical change important, but also crucial to the prospects of expanding the productive potential and possibilities of the society in an inclusive manner.
Achieving such an ‘inclusive advance’ of society, in the knowledge era, is about understanding how the interactions between different levers within the control of the state, can ensure that South Africa is not only ‘resilient’ but also adaptive to changes happening across different sectors. I want to consider two related concerns in this regard. The first is the South African National System of Innovation, and its ability to not only assist South Africa in responding to technological and structural change, but its role in positioning the nation as a pathfinder in technological and social innovation.
The second, relates to the role of research and development expenditure (R&D), the sectoral profile of such expenditure and its interface with the objectives of broadening employment, reducing poverty and inequality. I will conclude my discussion with some areas for potential policy reflection and action.
The National System of Innovation
The idea of a ‘national system of innovation’ extends the Schumpetarian formulation beyond just a firm or an individual enterprise, but to the multiple institutions and actors that contribute to the capacity and capability of a nation, region, sector or locality to ‘innovate’.
In this regard, the National Development Plan recognizes the need to ‘create a common overarching framework to address the pressing challenges in the national system of innovation’. The Plan recognizes that such a framework has to consider the interaction between the higher and further education system, state owned enterprises and private industry.(NDP, 2012: 326). This view complements the assertion that innovation as a ‘social process’, is an outcome of ‘cumulative historical trajectories’ built around specialization and institutional patterns unique and specific to a particular nation (Scerri and Lastres, 2013: 31).
The institutional and specialization patterns and features, inherited from our history and informed by our present, give us clues on the kind of innovations that would be viable and relevant in the South African context.
One of these ‘features’ is the nature of the accumulation path that South Africa has pursued, its mineral endowment and the interface this has had with social, economic and geopolitical shifts. Fine and Rustomjee (1997) define this path as the ‘minerals energy complex’(MEC). The MEC has informed and continues to inform much of the industrial spend on knowledge and intellectual property and the innovation that has emerged in South Africa.
If we are to use the example of South Africa’s considerable deposits of platinum group metals (PGMs); any innovations focused on this mineral cluster must consider the price outlook, future applications for the mineral and the role they can play in new technologies (i.e. energy storage) in a carbon-sensitive manner. Furthermore, if we accept that innovation is also about ‘localized’ experiences of collaboration between different actors in the innovation ecosystem; then innovation must also consider the role of local government.
Figure 1 Provincial R&D Expenditure Trends (2016/17)
Source : South African Science, Technology and Innovation Indicators, 2019
In the case of the platinum value chain for instance, the North West has an abundance of platinum deposits and mining activity, however it has a considerably low investment in R&D, because many mining companies conduct their R&D activities in Gauteng (DST, 2017: 72).
What this suggests is that there is a disconnect between where the minerals are found, and where innovation-related activities and institutions are located. Similarly, much ought to be made about auto-sector focused R&D by OEMs and local component suppliers, in the Eastern Cape for example, which lags behind on R&D spend.
The task of South Africa’s response therefore, to the Fourth Industrial Revolution, ought to also be to diversify the geographical location of innovation-related activities, in a manner that aligns with provincial, sector and firm-level strategies.
Sector-Level Research and Development Expenditure
The National Development Plan commits to the intensification of R&D spending, emphasizing opportunities linked to existing industries). The Plan goes further and argues in the context of ‘structural change arising from technological redundancy’, there is a role to play for the state in funding R&D and at times guiding the type of research and development undertaken in both the public and the private sector (NDP, 2012:110). The Plan further recommends that public policy ought to consider R&D in areas of existing comparative advantage, such as high value agriculture, mining inputs, low carbon technologies and downstream processing.
South Africa has experienced a decline in business investment in R&D activities. The illustration below in Figure 2 from the National Survey of Research and Experimental Development shows a steady decline since the 2007-8 crisis;
Moreover, if we consider government funding of R&D activities, by the sector charged with spending the money, we have seen since 2010, a ‘dramatic’ reduction by half of funding allocated to the business sector (DST, 2010:36), with a near three fold rise in the funding of higher education, and a steady rise in the funding of science councils and non-profit organizations.
Figure 2 Trends in Business Sector R&D Expenditure
Source : South African Science, Technology and Innovation Indicators, 2019
The 4IR Commission must consider these trends and engage whether or not these have led to a sizeable rise in the knowledge generation and innovations emerging from the sectors that have experienced a rise in public R&D spend.
Areas for Policy Reflection and Action
Globally, the government’s role in the innovation ecosystem, historically has been central rather than tangential to the development of innovative capability. GPS and internet technologies are examples of how state intervention can underpin and effectively crowd in innovative private enterprise activity. Many of the processes and technologies used in mining jurisdictions across the world, have their roots here in South Africa. However, for South Africa to innovate beyond its mineral endowment, there is a need to align knowledge and technology to our context;
- Innovations in labour absorbing sectors : South Africa has a massive challenge of semi and unskilled labour that is marginalized from formal employment. Policy must encourage R&D and knowledge spend in sectors that have a proven capability to employ those with limited skill (agriculture, tourism, construction, the social economy and the creative sector), to expand labour demand in these sectors to benefit from output and employment multipliers.
- Public Sector Innovation : Much of the service processes in the public services remain paper-based, and the digitization of these processes presents market and employment opportunities. Moreover, public procurement spend is uniquely located to give local inventors and innovators the scale that comes with government touchpoints. For example, why does the Post Office not become a key asset in the e-commerce ecosystem that many young entrepreneurs are starting to develop in South Africa.
- Localized Innovation: Innovation must be encouraged at a local level, with the necessary resources, investment and capability extended to areas with great need and innovative potential. This has the potential to diversify the sources of growth in South Africa.
The next phase then, requires the nation to not only entrench its position sectors of historic advantage, but also pursue latent comparative advantage in new product and service segments that are aligned to the particularities of our context.