The Keynote Address by Minister Parks Tau at the Naspers / MISTRA Platform Economy Research Launch in Johannesburg via a video call: “Accelerating Inclusive Growth Through the Digital Economy

”Mr Solly Malatsi, Minister of the Department of Communications and Digital Technologies,

Ms Phuti Mahanyele-Dabengwa, CEO of Naspers Limited South Africa,

Mr Joel Netshitenzhe, Executive Director of MISTRA,

Provincial and National Government Officials, Distinguished Guests, and Ladies and Gentlemen:

It is an honour to speak at this auspicious occasion for the launch of the Naspers and MISTRA research on the platform economy in South Africa. As the Department of Trade, Industry and Competition (the dtic), we welcome this launch as it serves as a spring board for fostering necessary exchange and collaboration between business and the public sector, which is required to extract maximum value of the digital platform economy for all South Africans.

This is an important research since the digital economy is an important global driver of economic growth, innovation and improved service delivery. According to the World Bank, by 2026 the contribution of the digital economy is expected to be a quarter of global GDP. It should be noted that the ICT sector is outperforming several sectors in2South Africa and already contributes around 17% of service exports and close to 3%of GDP.

As our country navigates the complexities of the modern economy, the integration of innovative technologies and industrial practices becomes increasingly pivotal in driving sustainable progress and fostering inclusive prosperity. However, amidst the aspirations for industrialization lie a myriad of challenges that pose formidable barriers to the realisation of inclusive economic growth.

Ladies and Gentlemen,

The Digital Divide

As we move towards the adoption of the Medium-Term Development Plan (MTDP),this must coincide with talent and digital skills development. In order to boost job creation potential of investments in the digital economy, the National Skill Fund will soon launch a new model for demand-led skills development, which will provide R800-million in funding to train unemployed young people in digital skills.

The empowerment of young people is critical if we are to address the digital divide between urban and rural areas with rural communities having less access to digital services. Of course, this digital divide presents us with opportunities we can lever age and positively exploit.

For instance, social media platform usage has grown exponentially in the past few years. In 2023, three of the biggest social media platforms - Facebook, WhatsApp and Instagram - all had a more than one billion subscriber base and monthly active users worldwide. This has fundamentally shifted the way consumers buy goods and services.

According to the Labour Service Research Report, “the platform economy in SA is reducing unemployment in various industries, providing critical income opportunities for an estimated 135,000 gig workers, or 1% of the employed population in SA's ehailing, e-commerce, entertainment and online delivery services.”

In the platform economy, we have to navigate the dichotomy between supporting businesses and creating jobs. An example of how we could approach this is through a business model for digital platforms to reduce or eliminate incentives and bonuses for gig workers as the company gains market share. In some cases, platform companies with a large market share will claw back bonuses.

In order for us to overcome the inherited concentrated market structure of the apartheid regime, South Africa needs to deepen its understanding of e-commerce and track participation in the digital economy and use this data to deliberately alter the structure of our economy.

Programme Director,

Competitiveness and the Township Economy.

In order to address the economic structure in a holistic manner, government measures have a significant impact but it is not sufficient to sustain economic growth. This is a reason we invite the private sector to invest more in the thriving township economy.

Research and policy development on the socio-economic impact of 4IR in the South African context is therefore very important. In this respect, the MISTRA’s research project on the societal value of the 4IR and its broader social impact is very helpful. Rightfully so, to inform policy, we agree that policy interventions must be tailored to our country’s unique resources, productive capacity and socio-economic needs.

By gaining insights into the dynamics of 4IR technology adoption, its implications for business competitiveness, and the policy interventions, the outcomes of evidence based research could unlock the transformative potential in South Africa's industrial landscape.

Fairly new industries that did not exist previously in South Africa such as applications for mobile communications and emerging technologies in, for example, a range of health care markets presents opportunities for growth.

Therefore, we need to identify barriers to increased participation of businesses in value chains that can grow sectors and will also provide the basis for a more comprehensive course of action. It should be noted that the dtic is in discussions with Takealot, the ecommerce subsidiary company of Naspers, to cooperate on stimulating the township economy nationally by enhancing value chains in underdeveloped areas of the country.

In this regard, the Takealot Group and the dtic are proud to announce a strategic partnership to scale the existing Takealot Township Economy Initiative across South Africa. This collaborative initiative is welcomed since it is designed to create employment, increase earnings potential, and improve market access for businesses especially in our country’s vibrant township communities.

Ladies and Gentlemen,

Building Technological Capabilities

At the heart of South Africa's industrialization efforts lies the imperative to embrace the principles and opportunities presented by the 4IR. The advent of transformative technologies such as artificial intelligence, robotics, Blockchain, and the Internet of Things (IoT) offers unprecedented potential to revolutionize traditional industries, enhance productivity, and unlock new avenues of economic growth.

Innovation stands as a catalyst for transformative change within the manufacturing landscape, offering a pathway towards enhanced productivity, efficiency, and competitiveness. Industrialisation through innovation is essential for driving economic growth, fostering competitiveness, and addressing societal challenges. These drivers can fast-track digital manufacturing transformation as described in the Science, Technology and Innovation Decadal Plan.

The adoption of advanced manufacturing technologies, enables manufacturers to enhance product customization, respond rapidly to changing customer preferences, and differentiate themselves in increasingly competitive markets.

Ladies and Gentlemen,

Africa and the Region

South Africa has numerous business opportunities available in the digital economy such as e-commerce as more consumers turn to online shopping. In addition to ecommerce, business opportunities are available for fintech, digital skills development, digital media and content creation, online services and gig economy, and healthcare tech.

It should be noted that in terms of fintec, digital platforms are crucial for enhancing financial inclusion through services such as mobile banking, digital payments and microloans to underserved populations. This has necessitated the need for skills development in these areas. The South African government is involved in various skill development initiatives to prepare the workforce for the digital economy. Nevertheless, we require partnerships with the private sector in order to reach the scale that we require to be globally competitive.

Unfortunately, there is limited evidence-based research on how South Africa can effectively leverage continental and regional policy frameworks and instruments to grow domestic industries. More work is therefore required to explore 4IR as a tool for opportunities in South Africa and other parts of the continent, to achieve South Africa’s socio-economic objectives.

Investors have raised a number of issues such as the electricity crisis and the theft of and destruction of ICT Infrastructure. The government is working with social partners to address these challenges and to improve the operating environment. Government. is moving forward with structural reforms that is critical to improve South Africa’s competitiveness. The recently-concluded spectrum auction is an example of this.

Programme Director,

In conclusion, as the dtic we take note of the findings of the Naspers/MISTRA report in terms of the pace of digital transformation in South Africa. Indeed, the demand for digital skills is growing and infrastructure is key to unlocking the promise of digital platform economy and AI. We acknowledge that regulations need to be alive to the nascent nature of the South African digital platform sector and digital platforms to play bigger role in economic inclusion and social protection.

As a country we will only be amongst the leaders in the digital economy space by fostering a conducive policy environment, promoting collaboration, and incentivizing investment in innovation to harness the transformative potential of our manufacturing sector to drive sustained economic growth and foster job creation.

I thank you.