The Fourth Industrial Revolution – South Africa

Opinion by Bill Harington

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The Fourth Industrial Revolution - South Africa
The Fourth Industrial Revolution - South Africa

The article below begins by explaining (the definition) of The fourth industrial revolution, going over to where Africa stands in total with respect to the revolution. Thereafter, the overview flows to South Africa and then directly to the drive by the ANC locally.

My own point of view is that SA is not ready for this revolution and since SA wants to pursue markets and its ideology of this Fourth Industrial Revolution, I think it is going to increase the unemployment figure, placing more strain on the Government paying out grants – money that we simply do not have. The ANC’s “smart city” will bring relief in the short term, but at what cost?

The ANC is currently changing the education system with grades R to 4’s which will simply have a free pass and even where pupils will receive a certificate in grade 9 and be able to leave school. Not to mention the 30% pass rate in general.

The ANC’s take on the 4thIR is to distribute tablets and computers to schools …… which was shortly stolen after vandalism and burglaries at these schools took place anyway.

– All in the name of 4IR, which neither they nor SA are ready for. Taking in consideration con-aspects playing a role and depriving the development and or dream of being a competitive player in this revolution, such as unemployment, an extremely high crime rate, poor housing, drought-stricken areas and and and…..in South Africa.

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The fourth industrial revolution is the current and developing environment in which disruptive technologies and trends such as the Internet of Things (IoT), robotics, virtual reality (VR) and artificial intelligence (AI) are changing the way we live and work.

Building on the widespread availability of digital technologies that were the result of the Third Industrial, or Digital, Revolution, the Fourth Industrial Revolution will be driven largely by the convergence of digital, biological, and physical innovations.

With growing business transparency, increased consumer engagement and changes in consumer behavior emerging because of the fourth industrial revolution, companies are adapting the way they design, market and deliver products and services to remain competitive.

Fourth Industrial Revolution. The Fourth Industrial Revolution represents a fundamental change in the way we live, work and relate to one another. … The speed, breadth, and depth of this revolution are forcing us to rethink how countries develop, how organizations create value and even what it means to be human.

What is the fourth industrial revolution in South Africa?

South Africa in the fourth industrial revolution: A new opportunity to create more jobs and a better society. Sim Tshabalala: Business Leadership SA’s “Contract with South Africa” commits us to strive for inclusive growth, job creation, and transformation.

Klaus Schwab, the founder of the World Economic Forum, argues that the single most important challenge facing humanity today is how to understand and shape the new technology revolution. What exactly is this revolution, and why does it matter, especially for Africa?

The “fourth industrial revolution” captures the idea of the confluence of new technologies and their cumulative impact on our world.

Artificial intelligence can produce a medical diagnosis from an x-ray faster than a radiologist and with pinpoint accuracy. Robots can manufacture cars faster and with more precision than assembly-line workers. They can potentially mine base metals like platinum and copper, crucial ingredients for renewable energy and carbon cleaning technologies.

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3D printing will change manufacturing business models in almost inconceivable ways. Autonomous vehicles will change traffic flows by avoiding bottlenecks. Remote sensing and satellite imagery may help to locate a blocked storm-water drain within minutes and avoid city flooding. Vertical farms could solve food security challenges.

The machines are still learning. But with human help, they will soon be smarter than us.

The first industrial revolution spanned 1760 to 1840, epitomized by the steam engine. The second started in the late 19th century and made mass production possible. The third began in the 1960s with mainframe computing and semiconductors.

The argument for a new category – a fourth industrial revolution – is compelling. New technologies are developing with exponential velocity, breadth, and depth. Their systemic impact is likely to be profound. Policymakers, academics, and companies must understand why all these advances matters and what to do about them.

So why does the fourth industrial revolution matter so much – specifically for Africa? And how should the continent approach the risks and opportunities?

Exciting opportunities
The revolution’s most exciting dimension is its ability to address negative externalities – hidden environmental and social costs. As Schwab has written:

Rapid technological advances in renewable energy, fuel efficiency, and energy storage not only make investments in these fields increasingly profitable, boosting GDP growth, but they also contribute to mitigating climate change, one of the major global challenges of our time.

Some countries’ growth trajectories may follow the hypothesized Environmental Kuznets Curve, where income growth generates environmental degradation. This is partly because natural capital is treated as free, and carbon emission as costless, in our global national accounting systems.

New technologies make it possible to truncate this curve. It becomes possible to transition to a “circular economy”, which decouples production from natural resource constraints. Nothing that is made in a circular economy becomes waste. The “Internet of Things” allows us to track material and energy flows to achieve new efficiencies along product value chains. Even the way energy itself is generated and distributed will change radically, relying less and less on fossil fuels.

Perhaps most importantly for African countries, then, renewable energy offers the possibility of devolved, deep and broad access to electricity. Many have still not enjoyed the benefits of the second industrial revolution. The fourth may finally deliver electricity because it no longer relies on centralized grid infrastructure. A smart grid can distribute power efficiently across a number of homes in very remote locations. Children will be able to study at night. Meals can be cooked on safe stoves. Indoor air pollution can basically be eradicated.

Beyond renewable energy, the Internet of Things and blockchain technology cast a vision for financial inclusion that has long been elusive or subject to exploitative practices.

Risks
No revolution comes without risks. One, in this case, is rising joblessness.

Developing countries have moved away from manufacturing into services long before their more developed counterparts did and at fractions of the income per capita. Dani Rodrik calls this process “premature deindustrialization”.

The employment shares of manufacturing, along with its value addition to the economy, has long been declining in industrialized nations. But it’s also been declining in developing countries. This is unexpected because manufacturing is still the primary channel through which to modernize, create employment (especially by absorbing unskilled labor) and alleviate poverty. Manufacturing industries that were built up under a wall of post-independence protectionism are starting to decompose.

The social effects of joblessness are devastating. Demographic modeling indicates that Africa’s population is growing rapidly. For optimists, this means a “dividend” of young producers and consumers. For pessimists, it means a growing problem of youth unemployment colliding with poor governance and weak institutions.

New technologies threaten to amplify current inequalities, both within and between countries. Mining – typically a large employer – may become more characterized by keyhole than open-heart surgery, to borrow a medical metaphor. That means driverless trucks and robots, all fully digitized, conducting non-invasive mining. A large proportion of the nearly 500 000 people employed in South African mining alone may stand to lose their jobs.

Rising inequality and income stagnation are also socially problematic. Unequal societies tend to be more violent, have higher incarceration rates, and have lower levels of life expectancy than their more equal counterparts.

New technologies may further concentrate benefits and value in the hands of the already wealthy. Those who didn’t benefit from earlier industrialization risk being left even further behind.

So how can African countries ensure that they harness this revolution while mitigating its risks?

Looking ahead
African countries should avoid a proclivity back towards the import substitution industrialization programs of early independence. The answer to premature deindustrialization is not to protect infant industries and manufacture expensively at home. Industrialization in the 21st century has a totally different ambiance. In policy terms, governments need to employ systems thinking, operating in concert rather than in silos.

Rapidly improving access to electricity should be a key policy priority. Governments should view energy security as a function of investment in renewables and the foundation for future growth.

More generically, African governments should be proactive in adopting new technologies. To do so they must stand firm against potential political losers who form barriers to economic development. It pays – in the long-run – to craft inclusive institutions that promote widespread innovation.

The Conversation There are serious advantages to being a first mover in technology. Governments should be building clear strategies that entail all the benefits of a fourth industrial revolution. If not, they risk being left behind.

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Ross Harvey, Senior Researcher in Natural Resource Governance (Africa), South African Institute of International Affairs

South Africa is caught in the global hype of the fourth industrial revolution
South Africa is caught up in the global hype of the fourth industrial revolution (4IR). This is distracting it from the unfinished business of redressing inequality and creating the preconditions for an inclusive digital economy and society.

Reinvented by Klaus Schwab of the World Economic Forum (WEF), 4IR technologies are presented as having the potential to propel digitally-ready countries into a new age of unprecedented economic prosperity.

The Forum’s appropriation of the concept has arguably been one of the most successful lobbying and policy influence instruments of our time.

Mobilizing around the elite annual gathering in Davos, the WEF policy blueprints on the 4IR fill a vacuum for many countries that haven’t publicly invested in what they want their own futures to look like. South Africa is one of them.

With visions of global prosperity, packaged with futurist conviction and fantastical economic forecasts of exponential growth and job creation, they appear to provide a ready roadmap in an uncertain future.

But caution is required. Even a cursory glance at earlier industrial revolutions will show that they have not been associated with the interests of the working or underclasses. This is despite the broader benefits to society from the introduction of steam, electricity, and digitization. Rather, they are associated with the advancement of capitalism, through the “big” tech of the day.

The so-called fourth industrial revolution is no different.

Rich school of thought

There is little to link the WEF’s reductionist conception of industrial development with the rich school of thought that has examined the complex and revolutionary change over time. The intellectual origins of the subject lie with Nikolai Dmitriyevich Kondratiev. In 1926, he identified waves and shifts in capitalism as it matured over time. This became known as the Kondratiev Wave. It was popularised intellectually by the Austrian political economist Joseph Schumpeter’s notion of “creative destruction”.

That concept now underpins much of the contemporary theory on innovation. It also informs thinking about disruption as a potentially positive economic and social force. So far, six Kondratiev waves are identified in the literature. Information and communication technologies are the fifth. Renewable energy is proposed as the sixth.

Yet this intellectual tradition has been ignored by the WEF. In addition, a range of institutions has responded to its clarion call. These include Ivy League universities, international industry conferences, multilateral agencies, development banks, and regional economic commissions.

At the same time, international donor agencies and governments are diverting public funding from pro-poor policy research agendas on digital inclusion to artificial intelligence as well as robotics, machine learning, drones, and blockchain. This, on a continent where Internet penetration in many countries is below the critical mass 20% believed to be necessary to enjoy the network effects associated with broadband adoption and economic growth.

In South Africa, the 4IR has become the mantra of every new policy initiative and official event. President Cyril Ramaphosa has thrown his weight behind it as the route out of the economic crisis. His proposed vehicle for pursuing it is a new presidential commission.

The limits of technology

The notion of a 4IR might be a convenient way of packaging history and of mobilizing people. But there is nothing inherent in so-called 4IR technologies that will necessarily result in economic growth, job creation or empowerment of the marginalized.

Evidence from the so-called third IR tells us we should not take for granted that technology will translate into wage or productivity growth. Nor will it necessarily generate “decent work”. Countries must first develop a good set of complementary policies, both as business and government, to reap the benefits of these increasingly pervasive advanced technologies.

The conflation of broad digital policy required to support social and economic transformation with this narrower aspect of the deployment and governance of the data associated with ‘4IR’ technologies is problematic. In fact, layering these advanced technologies over the existing structural inequality in South Africa will exacerbate existing social, economic and political inequalities.

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It is not that advanced technologies cannot be mobilized for developmental purposes. But technology, in and of itself, cannot change or disrupt existing modes of production. It also cannot determine positive or negative outcomes. The interests that mobilize behind or drive certain innovations and the uses to which the resulting technologies are put determine their social, economic and political outcomes.

Several South African government departments have developed WEF-inspired 4IR strategies. The most recent example is the 4IR framing report released by the recently re-merged Department of Communications.

Accenture, the international consultancy that partners with the WEF globally on the 4IR, has prepared a framework for the department. This, it says, will enable South Africa to become 4IR-ready.

Perhaps unsurprisingly, the report perpetuates some of the myths of the 4IR. It claims that 4IR technologies across industries in South Africa can, over the next decade, contribute R5-trillion worth of social and economic value. It also claims that they will create 4 million jobs.

The report says these are based on the methodology developed by the WEF in collaboration with Accenture. But there is no explanation of the methodology; no basic workings on how these figures were derived.

Here’s a quick reality check

South Africa has about 700 000 new young people entering the job market every year. The Centre for Economic Development and Transformation estimates that a growth rate of around 10% will be required to absorb these new entrants into the economy. But the current growth is only expected to reach 1.5% in 2019. It is then expected to rise to 2.1% by 2021

With the Accenture copyright emblazoned on the report, it has now been released as a government document. With a nod to digital inclusion, the report does observe that to make this miracle happen, South Africa will need to meet several conditions. These include improved connectivity, effective regulation, and functioning markets.

Optimized consumer welfare, redressing poor education outcomes, and developing an appropriate digital skills base for the new economy will all be crucial too. All undoubtedly correct, but this is no revelation. These are all objectives of the current policy that South Africa has failed to achieve to different degrees over the past 25 years.

The report makes no effort to explain why the outcome of two decades of policy reform and sector regulation has failed to maximize consumer welfare — its primary objective. Instead, the sector is characterized by rent extraction. This has been by both the private sector (high prices) and the state (license fees and secondary sectoral taxes that contribute to the high prices).

Like other reports from the slick international consultants over the years, they fail to engage with a host of critical inhibitors of digital inclusion and diffusion of advanced technologies beyond an elite. It does not ask why previous rounds of market reform weren’t successfully implemented. There is no reference to the absence of institutional endowments necessary to implement so-called international “best practice” in most African countries.

Addressing the reasons for the policy and institutional failures and proposing how these might be overcome would have gone some way to laying the ground for South Africa to more equitably embrace the impending “fourth industrial revolution”.

Alison Gillwald, Adjunct Professor, Nelson Mandela School of Public Governance, University of Cape Town

UNDERSTANDING THE FOURTH INDUSTRIAL REVOLUTION IN A SOUTH AFRICAN CONTEXT
The fourth industrial revolution refers to new ways in which we introduce and use technology into our societies. An example would include robotics, artificial intelligence, and nanotechnology.

The first industrial revolution brought mechanical innovations and with it steam power, which brought the coal-powered external combustion engine; it started in the late 18th century with the mechanization of the textile industry and the birth of the factory.

Over the centuries, we have seen two more industrial revolutions shape and develop societies throughout the world.

Fast forward to today, and we have been hearing from experts and politicians of the fourth industrial revolution.

But what is the fourth industrial revolution?

The fourth industrial revolution refers to new ways in which we introduce and use technology in our societies. An example would include robotics, artificial intelligence, and nanotechnology.

Raymond de Villiers, a speaker, and consultant who assists organizations understand trends that are influencing the future world of work, said that this is the stage that we, including South Africa, are currently in.

Like with every industrial revolution that has seen an introduction in a key technology that has added increased efficiencies and has brought about vast improvements in workplaces, it has made it cheaper to deliver products, but De Villiers said this has come at a cost for human labour.

“That, particularly in South Africa, is probably why we are hearing about politicians talking about the fourth industrial revolution every second chance that they get because job creation and the workforce is a massive issue for South Africa because… we can’t just drop technology in.”

He said this is because SA is faced with an epidemic of high levels of unemployment.

Is SA really ready for the fourth industrial revolution?
There is great enthusiasm for the fourth industrial revolution in SA. But are we ready for it? Not everyone thinks so
The keynote speech of US-based futurist George Friedman at a fourth industrial revolution (4IR) summit held earlier this month in Johannesburg opened a can of worms. Friedman appears to have boarded a plane and come all the way to Africa only to tell a gathering that SA should go back to the old way of doing things.

Friedman believes SA should take a step back to the third, or even the first and second, industrial revolutions for answers on how to lift a quarter of its population out of unemployment and despair.

Instead of trying to skip the phases that developed economies such as the US, China and Japan underwent, SA needs to place far more emphasis on a low-wage export system, Friedman said.

It means SA needs to develop industries to absorb low and unskilled labour. This, coupled with cheap labour, will attract business. And SA will earn money from exports, he told representatives of technology companies as well as executives and government officials.

“A vast part of the SA population is so impoverished that it won’t fully benefit from 4IR. China took advantage of its low wage rate and in essence exported labour. It is now one of the leaders of 4IR. SA needs to do the same,” Friedman said.

It’s an unpopular opinion. But does it have merit? And does it mean that SA cannot expect technology to assist its growth trajectory? With the growth of just 0.8% in 2018, there is no question that SA is in trouble.

But the MD of Deloitte Consulting for Africa, Thiru Pillay, disagrees with Friedman, saying he doesn’t understand SA’s context.

“[Friedman] articulates a very linear, one-dimensional approach to economic development,” says Pillay.

“Everybody agrees that we have [the] problem [Friedman mentioned], but people do not agree with his vision for our society.”

Friedman doesn’t have a vision for our country, says Pillay. “He has a very technocratic view about how to solve one problem — and we are not a one-problem country.” Pillay says SA has “deep technology adoption and a sophisticated services economy”. At the same time, the unemployment rate is 27% and 17-million South Africans rely on social grants from the state.

Wits vice-chancellor and principal Adam Habib says Friedman doesn’t understand that SA is not made up only of townships. “SA is both Alexandra and Sandton in the same place.”

One of SA’s biggest problems, Friedman said during his address, is that people don’t know how to raise themselves out of poverty. SA has a challenge of “social mobility”.

He pointed to the fact that a lot of people are very angry.

Pillay and Habib agree that SA’s marginalized communities should not be forgotten, was SA to rush into new tech.

“He’s right in identifying the problem. He’s right in us having to be pragmatic about it,” Habib says.

“Where he is wrong is he assumes we can only do one thing and not another.”

However, Habib says it is good to have a contrarian view and agrees that SA needs to deal effectively with those who are disenfranchised by unemployment.

SA’s unskilled cannot be ignored. “It’s an important thing to mention because in our policy frameworks we seem to forget it,” Habib says.

“People often say: ‘Everybody needs to get decent jobs.’ But what do people mean when they say ‘decent’?” Habib asks, explaining there are many steps to achieving economic equality in SA.

“How are you going to get someone to create a computer program when they haven’t finished school and doesn’t have literacy or a numeracy foundation on which to build the skills set?”

If SA is to benefit fully from 4IR, it needs to go beyond talk.

President Cyril Ramaphosa’s 4IR commission, announced in February, is the latest in a number of policy initiatives that recognize the importance that technology has for the economy.

But it isn’t the first. Independent analyst and researcher in ICT policy and regulation Charley Lewis says the National IT Forum of the late 1990s had a similar mandate. “We were arguing for ICT to be positioned at the level of the presidency then, already.”

SA has in the past participated in the UN’s Broadband Commission of May 2010, with the cabinet adopting a national broadband policy called SA Connect in 2013. It aimed to deliver 100% broadband connectivity to government facilities by 2020 and broadband access to 90% of the country’s population by the same year.

Another policy document, the National e-Strategy, gazetted in late 2017, seeks to address the ICT skills gaps in SA.

Already, concerns have been raised about the 4IR commission’s mandate and the government’s inability to create policy and investment that will help re-skill those people whose jobs are now redundant.

Lewis says immediate priorities are the finalization of the Electronic Communications Act and the allocation of spectrum to broadcasters and telecommunications operators.

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A spokesperson for the recently renamed communications & digital technologies department Nthabeleng Mokitimi-Dlamini says the government is committed to the success of the 4IRSA partnership, which will facilitate dialogue to shape a 4IR policy.

It is an initiative of the universities of Fort Hare and Johannesburg, Wits, the government, and Telkom.

The 4IRSA partners are to provide a research report to the 4IR commission, says Mokitimi-Dlamini. This will become a strategic document that will serve as a base for developing a national strategy for 4IR by the government.

There is no question that the 4IR strategy must pay special attention to SA’s unique problems, some of which Friedman mentioned. The technology that SA uses to drive growth must narrow rather than widen the inequality gap.

Business Leadership SA’s “Contract with South Africa” commits us to strive for inclusive growth, job creation, and transformation.

To become a truly modern, prosperous, fair and decent society, we have to reimagine who we are and what we can do.

Our first order of business should be to reverse the decline in our economic competitiveness and in the quality of our governance, particularly as measured by policy certainty and by control of corruption. Ten years ago, South Africa was ranked 45th in the Global Competitiveness Index. This year we are 61st. In 2000, the Worldwide Governance Indicators ranked South Africa in the top quarter of countries for control of corruption. We have dropped 14 places since then and now rank as just about average.

As lawyers say, res ipsa loquitur: These facts and their consequences speak for themselves. South Africans have been getting steadily poorer since 2014. Unemployment is at world-record levels: for every young person with a job, two are out of work. Statistics South Africa has just pointed out that this means that we are not benefitting from the demographic dividend that we should be generating from the energy and skills of our young people.

Corruption is not a ‘victimless crime.’ It creates huge costs and inefficiencies by draining resources and opportunities out of the rest of the economy and redirecting them to benefit only the ‘connected.’ As members of organizations like Business Leadership South Africa, and as citizens, it is our duty to defend our Constitution and to reject unethical and criminal behavior wherever we find it in boardrooms, in government, and on the streets. We should do this both because it’s the right thing to do and because doing so will create jobs and growth.

We could create still more jobs if South Africa could achieve certainty about mineral rights and about rural land ownership and if we could settle on serviceable modern ICT regulations. Yet more growth and jobs would be created by reforming the energy and transport sectors to make them more competitive so that we could get commodities to international markets, and attract tourists to South Africa, faster and more affordably.

But even once we have completed these reforms, we would still be a commodity-dependent middle-income country with high unemployment and very high inequality – yes, a much better South Africa, but not the South Africa we want and can become.

In order fully to achieve the aspirations of our Constitution and the National Development Plan, I believe we need to think differently and come to grips with the fact that the world is undergoing a fourth industrial revolution, driven by universal broadband, artificial intelligence, and robotics. Many routine physical and clerical jobs for humans are at risk of being replaced by software or robots. In the past, countries might have been able to industrialize by keeping wages low. But no country will be able to keep their wages lower than a robot’s if it is committed to preserving workers’ rights and human dignity.

South Africa now needs to draw on strengths that we perhaps don’t always fully appreciate having and to use these strengths to explore the new opportunities created by the fourth industrial revolution.

For instance, we usually think of ourselves as a country of mines, factories, and farms– and of course, that’s still largely true. But we are also a country of cities – and pretty impressive cities at that. Two-thirds of our output is produced in the nine metros, and each of our nine metros does several things really well. As World Bank research has shown, if each city could learn from the best practices in the others, they would all run more efficiently than the average city in the rich world. There is no reason why Durban and Johannesburg can’t be as efficient as Bloemfontein when it comes to getting electricity; there’s no reason why Cape Town can’t be as efficient as Ekurhuleni in registering businesses. In other words, just by learning from each other, we could become a country of world-class cities very quickly.

In fact, in some areas, our cities are already world-class. Cape Town today has many more active entrepreneurs than the average rich-world city. And both Cape Town and Johannesburg are internationally recognized as fintech hubs, which enables us to extend financial services affordably and safely to almost all adult South Africans, to invest in SMEs, and to compete successfully in the rest of Africa and the wider world.

It’s not a coincidence that South Africa has several excellent universities. I don’t think we always fully realize just how good they are: UCT and Wits are ranked among the top 1% of universities in the world in both the Times Higher Education and the QS world university rankings. Several others are also world-class.

Next, despite the fact that we’re a primary commodity exporter with a generally struggling manufacturing sector, we’re also surprisingly good at ‘medium-tech’ production for export and we have a small – but growing – high tech sector. In total, medium and high tech exports now account for 54% of the value of our manufactured exports.

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However, on average, and compared to the value of their sales, South African manufacturing firms spend seven times less than American companies on research and development (R&D). If you think that’s an unfair comparison because the US is so rich, then consider the fact that Kenya spends 30% more per head on R&D than we do.

Strangely enough, even over the increasingly difficult period from 2009 to 2014, the return on R&D in South Africa was around four times higher than in the United States, and eight times higher than in Taiwan. In other words, South African companies that aren’t investing in innovation are missing a valuable opportunity to increase their profits. Of course, this is partly because investors and managers lack confidence owing to the declining quality of our regulatory and business environments. (South Africa’s business environment has deteriorated by 2.3 basis points on the global Doing Business regulatory quality measure since 2010, and is now ranked 74th, down two places from last year.)

Nevertheless, given the huge returns to R&D, persuading our companies to invest in research at our universities and to do more R&D in-house should be even easier than making our metros into world-class places to do business.

What does all this add up to? Simply this: South Africa could be on the verge of a new phase of rapid growth. Given the governance and competitiveness reforms I have mentioned, South Africa can be an increasingly efficient commodity exporter and an attractive tourism destination. Given cities that are willing to learn from each other and firms that are willing to invest in innovation, South Africa can also become a competitive medium- and high-tech industrial exporter, particularly to the rest of Africa, and Africa’s knowledge and ICT hub.

The obvious – and very large – problem with South Africa’s previous periods of rapid growth is that the lion’s share of the benefits has gone to elites, leaving the vast majority of South Africans only slightly better off at best. Mass exclusion reduces demand and investor confidence and has a strong tendency to push governments into populist policies that are bad for growth. This time, therefore, we should do everything we can to ensure that growth will create decent jobs, useful skills, new enterprises, and a sense of fairness and social solidarity.

Of course, skeptics worry that growth driven by the fourth industrial revolution will be even more exclusionary than in the past. Won’t all the ‘jobs’ go to robots? Won’t all the new wealth go to those with the most capital and the most valued scientific and engineering skills?

The first question is easier to handle. Yes, in the most advanced economies, some jobs will probably be permanently lost to robots. And in all economies – including South Africa – we will need to make sure that people who work in the ‘gig economy’ as permanent freelancers are not exploited. But the ‘rise of robots’ simply does not mean the end of human usefulness – any more than the steam engine or the telephone did. This is particularly true in a middle-income country like South Africa. Here, economic modeling shows that an increase in innovation would actually create a lot of jobs in almost every part of the economy, with particularly positive effects in mining, construction, and heavy and high-tech manufacturing.

Two good examples of the way this works in South Africa have been identified by the World Bank: Carbon capture and storage, which could make our electricity much cleaner and create construction jobs; and Afta–Robot, which uses smartphones to connect commuters and minibus taxi operators, making the daily commute more efficient for both drivers and passengers. In financial services, digitization means that people in branches, call centres, and back offices will do fewer very routine tasks and more interesting and fulfilling work helping customers, solving complex problems and assisting enterprises to grow and to create jobs. And financial services’ increased overall competitiveness will mean more demand – and therefore more income and jobs – throughout the economy.

The second question is harder. There is a real risk that the fourth industrial revolution will worsen inequality even further. We can’t afford to let this happen. At least to some extent, South Africa can choose what kind of companies and labour relations we want by setting minimum standards. However, it is still likely that more people are going to be permanent ‘gig’ workers and so we may need to redesign the pensions and unemployment insurance systems to provide all workers with a safety net that works for them. Equally, if returns to capital (in the form of software, networks, and robots) are going to rise faster than the returns to labour, then we should be debating ways to create broader ownership of capital.

Furthermore, I believe that an open-minded and evidence-based conversation about the social security system is called for. For instance, one interesting policy notion is whether a Basic Income Grant for all citizens would be a good idea in South Africa, as technology and society evolve together over the next several decades. There may be a case for a BIG that would enable everyone to escape the worst poverty and to create the basic security and modest resources that allow people to look for a job or take an entrepreneurial risk. As Professor Guy Standing writes, ‘a sense of security is required in order to be rational, tolerant and compassionate’ – and South Africa surely needs more of all three of these qualities. On the other hand, opponents of a BIG argue that it would be unaffordable, that it would entrench dependency, and that our focus should be on using our resources to promote faster growth, which would make a larger difference than a BIG. In my view, we should all be open to being persuaded by the evidence, either way.

Having said all this, the most complete and satisfactory answer to the second question is to improve our schools and technical education systems so that people are equipped with the skills they need to flourish in the digital age. Our primary and secondary schools are still far too weak; our technical and vocational colleges are too small and their curricula are out of date. And now we urgently need to provide life-long education in digital skills. I think that South African companies have a clear responsibility to provide life-long training opportunities both to our employees and to our communities.

In this area – once again – South Africa can draw on our strengths. The government provides a comprehensive set of public support programs for entrepreneurship and innovation. According to the World Bank, these programs are far better than those in most developing countries and bear comparison with those in the rich world. If we can do this so well, what is stopping us from encouraging more entrepreneurship in providing basic and vocational education, and from using digital technology far more widely in teaching and learning?

Business Leadership South Africa says in our Contract with South Africa that this must be a country that works for everyone. As I have argued here, this is not an impossible dream. With some fresh thinking and some cooperation, we can make it happen.

The ANC vs the Fourth Industrial Revolution
Our Deputy President did not know what the Fourth Industrial Revolution was when asked about it last year. But it remains on everybody’s lips. The President last week addressed a high-level summit on the subject, and numerous task teams, conferences, and workshops have taken place.

Knowing our esteemed President we might expect another summit fairly soon.

For the sake of the Vice President, let’s say that the first IR was based on steam, the second on mechanization, and the third on information technology. So what is the fourth? Basically it entails the penetration of very advanced technology and IT into spheres of life never before imagined, from the body and the home to work and cultural and social life.

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Anything from Robots to Nanomaterials and Genetic manipulation may be included.

A vast change in the structure of societies and economies worldwide is well underway whether we like it or not.

This is not going to be easy to deal with given the state of our economy. We already have sky-high unemployment – but it has been estimated by the World Economic Forum that up to 40% of white- and blue-collar jobs in South Africa are vulnerable to extinction as this revolution proceeds, and that a range of previously inconceivable, mainly very highly skilled, jobs will emerge.

A recent Russian survey of such future jobs includes nanomaterials designers, environmental counselors, neural interface designers, and genetic consultants. Many new jobs will be creative rather than mechanical.

The progression of this change is unavoidable. You can’t “decide” to engage or not engage in it. Just as the IT revolution – cellphones and computers for example – invaded our society, so will these changes. Your best bet is to try to stay ahead of it and engage it on your terms.

Only one Department in government actually knows and understands something of this – the Department of Science and Technology. Overseeing the country’s highest levels of Science and Innovation did in Universities, the CSIR and other agencies, this Department is, by comparison with what we see elsewhere – a well-run gem. It provides funding for Universities and others to work in a substantial number of the fields of the future, including large data analysis, robotics, nanotechnology, new materials, advanced astronomy, climate science, bio-innovation, the hydrogen economy, various aspects of the environmental sciences, and dozens of others. We have many top researchers, some world-class, who do this work.

It does not fund genetic research or microbiology or any others of the most advanced medical and biological sciences as this is done through the Medical Research Council. But it is the mainstay of South Africa’s modest efforts to develop and sustain its own science base – to work against a situation in which we are, indeed, colonized by the knowledge and know-how of more advanced economies.

But it is one of the most neglected Departments in government.

A paltry budget of R8bn annually for research and development covering the whole country barely equals the budget of just one of our major Universities. And this budget has been shrinking, in real terms, every year for the past several years. In an era of very widespread populism, research is treated as a luxury rather than a necessity and is even resented by some as a waste of money.

The National Research Foundation and the CSIR, each of which funds and stimulates research of the highest order for the entire country, each survive on a basic Parliamentary grant of roughly R1bn per annum. Their base shrank by 4 percent in real terms this year. Their dependence on private funding reduces their ability to pursue the frontiers of knowledge. Top researchers now get less funding than they did five years ago and the amounts dedicated to advanced areas of work are often paltry – in the millions rather than the billions. Research entities are demoralized and new young researchers come forward in depressingly small numbers. Infrastructure remains dated in many places.

The Department has valiantly sought to keep the national research effort going under difficult circumstances. However, they are now saying that fundamentals will have to be cut as the budget has shrunk below a sustainable level.

The Department of Science and Technology is merging with the massive behemoth which is Higher Education and Training. Higher Ed has more than ten times the budget of Science and Technology (over R100bn). Unlike Science and Technology, it has little or no expertise or funding related to future concerns. It is overwhelmingly concerned with the travails of student funding and has little time or inclination to go further.

It cannot yet provide most of the skills needed for the future.

So the question arises: how will the more forward-looking Department of Science and Tech be treated in a merger with the stagnant and bureaucratically overburdened Department of Higher Education and Training. This will be a litmus test of the seriousness with which the government really takes their commitment to the future, whether we call it the Fourth Industrial Revolution or not.

If it is just a fad, a fantasy, a buzzword there to distract us from the terrible state of our economy and society, then Science and Technology will remain a small and struggling blip on the screen. The ineffective and floundering bureaucracy which is Higher Education will prevail and Science will suffer. If there is a serious commitment to the matter, then the budget for advanced Science will rapidly escalate, in keeping with the need for us to stay on top of, rather than succumb to, future trends.

As it stands the phrase “Fourth Industrial Revolution” seems more like a buzzword than anything else, and in this Department at least, the Government is failing to put funding forward to back its rhetoric. It’s time for us to use our money to support and develop what we already have rather than ill-informed fantasies.

SMART CITY AND BULLET TRAIN – RAMAPHOSA TELLS CITIZENS TO DREAM BIG
President Cyril Ramaphosa’s first Sona after the May elections was long on what the country should be reaching for but short on concrete plans on how to get there.

President Cyril Ramaphosa has urged South Africans to dream big, in spite of the social and economic challenges facing the country.

He’s set out ambitious goals for the next decade, including his personal dream of a smart city full of skyscrapers and a bullet train linking megacities with remote rural areas.

Ramaphosa’s first State of the Nation Address after the May elections was long on what the country should be reaching for but short on concrete plans on how to get there.

“I dream of a South Africa where the first entirely new city built in the democratic era rises with skyscrapers, schools, universities, hospitals, and factories.”

There was more: “We should imagine a country where a bullet train passes through Johannesburg as it travels to Musina and it stops in Buffalo City on the way from eThekwini to here in Cape Town.”

Ramaphosa set out five goals for the next 10 years: no-one going hungry, the economy growing faster than the population, jobs for two million young people, violent crime halved and 10-year-olds able to read and understand the meaning.

All worthy goals, but hopes for his speech pivoted more on the need for plans and timelines to achieve them, rather than building more castles in the air.

#SONA2019: Ramaphosa dreams of building a new ‘smart city’
Parliament – South Africa has not built a new city since the dawn of democracy and the time has arrived time to think about building a “smart city”, said President Cyril Ramaphosa.

He said South Africans should imagine a country wherein all enjoy comfort and prosperity and where “bullet trains pass through Johannesburg as they travel from here [Cape Town] to Musina, and they stop in Buffalo City on their way from eThekwini back here”.

“I dream of a South Africa where the first entirely new city built in the democratic era rises, with skyscrapers, schools, universities, hospitals, and factories.”

Ramaphosa said his idea of a smart city was fuelled by a conversation he had with several people including Chinese President Xi Jinping, local government Minister Nkosazana Dlamini-Zuma, International Relations Minister Naledi Pandor and ANC deputy secretary Jessie Duarte.

“We have not built a new city in 25 years of democracy. Seventy percent of South Africans are going to be living in urban areas by 2030. The cities of Johannesburg, Tshwane, Cape Town and eThekwini are running out of space to accommodate all those who throng to the cities.

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