11 July 2019
Budget Vote Address by Ms Stella Ndabeni-Abrahams, Minister of Communications and Digital Technologies at the National Assembly, Parliament, Cape Town Theme: Growing the Economy and Driving a Digital Society through the Fourth Industrial Revolution
Honourable House Chairperson
Deputy Minister Pinky Kekana
Chairperson & Honourable Members of the Portfolio Committee
Presidential Commission on the Fourth Industrial Revolution
Chairpersons and CEOs of State-Owned Entities
Captains of Industry
Members of the Media
Ladies and Gentlemen
We dip our banners and join South Africa in mourning the tragic loss of Mr Mandla Maseko, the aspirational astronaut who died in a bike accident over the past weekend. His untimely death comes as the continent prepares to laud him as the first black African to travel to space.
We also learnt with sadness about the passing of veteran actress, uMama Nomhle Nkonyeni earlier this morning. A recipient of the Order of Ikhamanga in silver, Mama Nomhle boasted a career than spanned 50 years and starred in various television, film and stage productions such as Igazi, Gazlam, Red Dust and Die Swerfjare van Poppie Nongena.
May their souls rest in peace.
Delivering the inaugural State of the Nation Address of the sixth democratic administration, His Excellency President Cyril Ramaphosa, emphasised that the resolution of our developmental challenges - the triple evils of unemployment, poverty and inequality, largely depends on growing our economy.
We must add that this economic growth that we desire must be inclusive, to gain traction given the historic exclusion of the black majority. The importance of inclusive growth is becoming more pronounced given the reality that key sections of our society such as the youth and rural communities are bearing the most brunt of a sluggish economy.
Within the construct of inclusive economic participation; government, labour and the private sector must work together through a social compact that recognises the need to be single-minded in accelerating economic growth.
Contributions must come from all industries and our efforts must seamlessly be felt within and outside the borders of our country.
In this respect, our response to the Fourth Industrial Revolution presents us with a unique opportunity to harness our individual and collective talents, energies and strengths to decisively address the economic and social challenges that we currently face. It presents an opportunity for all in society to participate in the digital economy, whether it be for social welfare or business interests; as creators or consumers of goods and services; and whether trading locally, regionally or internationally.
Irrespective, the Fourth Industrial Revolution represents an opportunity for inclusive contributions to the national effort of turning around our economy and society for the benefit of all.
At its core, it represents the extent to which the digital economy is becoming a key ingredient to the production processes, in various sectors such as education, health agriculture, manufacturing, financial services or infrastructure development.
Further, it represents the extent to which societies can overcome their traditional challenges and people can lead dignified lives, be it through better guarantees of safety and security, easier access to effective healthcare, broader access to education, better social mobility through gainful employment or more comprehensive and responsive social protection systems.
Public services are also not immune from this development as governments and cities recognise the need to invest in smart digital services to better understand societal needs and optimally design legislative, policy and regulatory responses to those needs.
Recent studies by Accenture and the World Economic Forum estimate that the aggregate value that can be derived by our country from the digital transformation of our society and the economy is about R5 trillion. More specifically, this economic value addition would result in roughly four million new jobs.
Whilst we acknowledge that some jobs will become obsolete, we cannot afford to bury our heads in the sand and ignore this critical phenomenon, the opportunities it presents, and the necessary steps that we must take as a nation to minimise risks and maximise benefits.
As a government, we are committed to transforming the telecommunications and digital industries market structure. Key to such an objective is the requirement to remove barriers to entry for new market players, noting that the mobile industry is highly concentrated.
We must therefore be forthright in investing in digital skilling and re-skilling of our people as an imperative for inclusion in the digital economy.
Trade and Digital Economies
In June, Minister Ebrahim Patel and I had the privilege of participating in the G20 Summit that was held in Osaka, Japan. This summit brought together, for the first time, Trade and Digital Economy Ministers from various selected countries to present opportunities and deepen understanding of the interface between trade and the digital economy.
As respective G20 Ministers, we acknowledged the fact that digitisation presents both benefits and challenges to society. We also agreed that this phenomenon of digitisation presents us with a rare opportunity to drive inclusive and sustainable economic growth.
This has reaffirmed our resolve as the South African government to locate digital innovation at the core of our economic growth.
In our quest to digitally transform the nation, we also acknowledge the fact that the vast majority of our people still lack access to digital infrastructure, which is the bedrock for the digital economy.
In this respect, the 4IR must therefore be viewed as providing impetus to the objectives of the National Development Plan. Our challenge therefore is defining the strategic areas of investment in 4IR that will position South Africa as a leader in this revolution.
Presidential Commission on the 4IR
It is against this background that in March 2019, President Cyril Ramaphosa established the Presidential Commission on the Fourth Industrial Revolution comprising of eminent persons drawn from a cross section of industries, academia, labour and civil society.
The Commission as chaired by President Ramaphosa and his deputy, Professor Tshilidzi Marwala, has been inducted and is already hard at work focusing on the following six delivery areas:
- policy and legislation,
- human capital and the future of work,
- research, technology and innovation,
- infrastructure and resources,
- industrialisation and commercialisation and
- economic and social impact.
To ensure that the work of the commission is realised into government priorities, the President has appointed the Inter-Ministerial Committee on 4IR which comprises of the Ministers of Communications & Digital Technologies, Basic Education, Employment and Labour, Higher Education Science and Innovation, Trade, Industry and Competition, Mineral Resources and Energy and Small Business Development.
Within the next few months the Commission will engage with key stakeholders and the public, working towards the development of South Africa’s blueprint on 4IR.
Digital Economy Summit
On the 5th of July, we hosted the Digital Economy Summit in Midrand as the first step towards bringing all economic and social players to the table on the collective effort of understanding the drivers for unlocking the value of the 4IR within the economy and society and with a focus on the specific drivers for job creation in this new world.
The outcome of the Digital Economy Summit will serve as an input into the work of the Presidential Commission.
Further, to showcase technological innovation, we enacted, through a collaboration with Nokia and Vodacom, a replication of the summit in Rustenburg using a holographic projection. This was the first time that a Head of State was broadcast live utilising 3D holographic technology. This move signalled our readiness to cement South Africa’s position as a leader in the Fourth Industrial Revolution.
Policy Review for the Digital Economy
The Electronic Communications Act has played its role in transforming the industry to its current position. However, overhauled instruments need to take into account the plurality of players across all aspects of the value chain as well as new emerging markets.
As indicated, we need to immediately overhaul our policies in order for them to respond to a changing industry that is increasingly dominated by data and an ecosystem of digital platforms.
Reconfiguration of the Portfolio
The merger of the Ministries of Communications and Telecommunications & Postal Services into a single Ministry of Communications and Digital Technologies is designed to ensure better alignment and coordination on matters that are critical to the digital economy and 4IR.
We have, since our appointment, been seized with the task of creating a new department that places at its centre, the digital transformation of government and support for a digital economy and society.
We are currently designing an optimal structural and institutional framework that will speak to our new mandate. This entails defining the focus areas and operating model of the new Department of Communications and Digital Technologies and aligning these with the outcomes of the Presidential Commission in order to ensure that the new department is indeed the champion leading on matters related to the 4IR.
The design and alignment of work will inform and guide how our continuing operations in relation to some of the key public policy promises made under the previous department. To this end, we are also engaging our stakeholders, departmental employees and unions about the new mandate.
All these processes will culminate in the finalisation of the organisational structure for the new department and a strategic plan. The Annual Performance Plan will therefore need to be reviewed and amended in line with the new mandate and structure that will feed into a single budget for the new Department.
SOEs under the department are also being reconfigured in line with the new mandate.
Through the reconfiguration of some of our SoEs, we will establish a new infrastructure company that will be responsible for the rollout of infrastructure and connectivity. As part of the creation of this company, we will ensure that all state infrastructure initiatives are harmonised and coordinated.
We will further reconfigure our entities to create a streamlined regulator that will respond to the emerging needs of the digital society.
As we ready South Africa to take its leading position in the Fourth Industrial Revolution, we will also position NEMISA to be a digital skills institute that will train government employees and members of the public.
As part of ensuring development of the sector, we will also present to Parliament, the Digital Development Fund Bill to establish the fund to support innovation.
In order to drive digital transformation in government, there is a need to establish the State IT Company. This will entail the repurposing of the current State Information Technology Agency to drive innovation, transformation, localisation, cyber-security, e-government and IT service management.
We will further repurpose the South African Post Office to take advantage of the thriving e-Commerce and financial services environments, with the latter through the Post Bank.
Finally, government is actively looking at strengthening the South African Broadcasting Corporation. As we reported in the Portfolio Committee last week, we continue to engage with National Treasury on a lasting financial solution for the public broadcaster.
To this end, working with National Treasury, we will in the next ten days, provide a portion of the interim relief and the remaining balance within the next 45 days.
However, this is subject to the SABC meeting all the set conditions and requirements. In this regard we will work with the Minister of Finance towards an institutional mechanism to support the turn-around effort, and this includes the appointment of the CRO.
Digital Transformation of Government
The digitisation of government services is an important pillar of digital transformation and therefore the department will lead the process of fast tracking the digital transformation of government services with a particular focus on front line services.
In responding to the President’s call for the district service delivery model, we will be working with all government departments and stakeholders to support cities in digitising their services. Government will, within ninety days identify priority districts for this purpose.
Broadband Rollout – Connecting South Africa
To date the Department has facilitated broadband connectivity to 570 facilities including schools and health facilities. This is in addition to what the industry is doing. For example, Telkom has about 160 000 km of fibre which will be critical as we move forward into the 4IR. Broadband Infraco has rolled out 15 000km of fibre and 147 Points of Presence throughout the country. Sentech has an extensive wireless network with more than 300 sites to deliver digital and broadband services.
Going forward the Department will focus on rolling out broadband services to additional 400 facilities, majority of which will be schools and health facilities. Through ICASA, we will also review the current universal service obligations to ensure alignment with SA Connect standards.
During the Medium Term we will review the download speeds to be in line with international best practice. This will form part of the work we are currently doing with the Development Bank of South Africa which will be concluded by the end of the financial year.
Furthermore, the feasibility study for the second phase of the rollout will be coordinated and the study will investigate cost-effective and efficient ways, inclusive of public-private partnership models, of rolling out services as well as funding broadband on a much larger scale.
High Demand Spectrum Licensing
On the licensing of Unassigned High Demand Spectrum, we will within the next seven working days, issue the Final Policy and Policy Direction to ICASA.
As the international ICT community prepares for the World Radio Conference that will be held in Egypt in October 2019, plans are afoot for South Africa’s participation in the discussions in SADC, Africa and International Fora to ensure that this time we are not left behind and do not delay our people and country the meaningful role they can play as 5G is not only telecommunications based but cuts across all sectors.
Accelerating the Broadcasting Digital Migration (BDM) programme
Within 90 days, the department will present the reviewed broadcasting digital migration delivery model in order to enable the swift release of the high demand spectrum needed for the rollout of broadband and effective DTT migration.
Skills Development as a key tenet of the 4IR
The late former President Nelson Mandela once said, “If you talk to a man in a language he understands, that goes to his head. If you talk to him in his language, that goes to his heart.”
Indeed, the language that we use, influences the way that we think and act. Therefore, making content readily available in multiple languages enables a connected society. As such and as part of the Internet for All Initiative we have established a Working Group on Content which has commenced with translating Wikipedia content into the ten official languages of South Africa, save for English.
To this end, both isiXhosa and SiSwati translations have been completed and learners from schools in the Eastern Cape and Mpumalanga have already started with the project.
You will recall that in my 2018 Budget Vote speech, I made a bold statement to train one million young people on data science and related skills to ensure that they are equipped to take advantage of new digital technologies, unlock future jobs and drive competitiveness.
To this end, the National Digital Skills Strategy has been submitted to Cabinet for approval and we have, through a partnership with portfolio entities and stakeholders such as MICT SETA, Telkom, Cisco, Vodacom, MTN, Google and Microsoft; amongst others, trained more than 20 000 young people in data science and related skills including; cloud computing, digital content production, 3D printing, drone piloting, cybersecurity and software development.
Further, Accenture is investing in Future Skills development with a special focus on the youth and contributing to the township economy. This is exemplified by the Accenture Java Academy in partnership with Codex and the longstanding, proven Skills to Succeed Programme. We invite partners to join us in this digital skills revolution.
Cumulatively, portfolio entities and private sector companies spend approximately R20 million per year on bursaries for tertiary students studying in the STEM fields. The sector also utilises about 300 interns, most of whom are then absorbed into the respective companies.
Present today are young e-gamers and e-sport enthusiasts from TAM gaming. This is one of the fastest growing sectors enabled by the Fourth Industrial Revolution that presents an opportunity for young township entrepreneurs to enter into this multi-billion industry.
Huawei has partnered with these young entrepreneurs to ensure that young people in townships and rural communities are exposed to and capacitated to compete in e-sports. The Department is also working with SEDA to assist TAM gaming to offer training in township and rural areas.
The Department is working on a programme to support and sustain existing ICT SMMEs, including the ISPs supported in the 2018/19 financial year. Around 180 ICT SMMEs will be capacitated on cellphone repair and other key business management skills. The programme will be implemented in partnership with the Technology Innovation Agency, NEMISA and SEDA.
Additionally, 100 SMMEs and individuals will be trained on fibre and Wi-Fi deployment skills, in partnership with the Wireless Access Providers Association (WAPA). This is in line with the NDP priority of unlocking the potential of SMMEs to contribute to the target of creating 11 million jobs by 2030.
Growing SMME’s in the ICT sector and the digital economy in particular will be prioritised in the coming financial year. Portfolio SOEs will, at the minimum spend 40% of their capex budget on youth and women owned SMME’s.
It is crucial that we focus on the SMME sector as it has significant labour absorptive capacity more than the larger firms that are currently restructuring to respond to a challenging economic climate.
In the previous financial year, portfolio entities and private sector companies spent over R1 billion on SMMEs and have committed to spent more this financial year. In our oversight function, we will monitor the extent to which this commitment is sustained.
We have also engaged big mobile operators in our sector to support SMMEs and provide greater access to their infrastructure at a cost that is sustainable. The feedback we received from the mobile operators is that they are already factoring the procurement spend for SMMEs in their capex.
In conclusion, it is important to point out that the first movers in any industrial revolution derive the most benefit for generations to come. It is our considered view that setting aside resources to invest in the 4IR will ensure that South Africa plays a leading role in the continent with its 1.3 billion population.
Allow me to conclude by making A CLARION CALL under the theme of Khawuleza which must define our work now and in future. The youth of our country cannot wait anymore. We have to deliver on the commitments we made in the manifesto of the governing party.
Honourable members, this brings me to the Appropriation of our Budget. The Budget allocation for the Department of Communications in the financial year 2019/20 is R1 576 100 billion. The allocation for the Department of telecommunications and Postal Services for the financial R1 684 574 billion. I invite the house the adopt the Budgets as presented.
In ending, I wish Bafana Bafana well in their AFCON game against Nigeria.
I thank you.