Growing South Africa’s digital economy has been a major policy pillar for the country’s government for some time now. It’s a key driver of economic growth around the world, with the global digital economy growing at 2.5 times the pace of its traditional counterpart. Additionally, reports from the World Economic Forum (WEF) and International Data Corporation( IDC) suggest that up to 60% of the global economy is now digitised. As such, boosting South Africa’s economy isn’t just a way for it to achieve overall economic growth. It’s also vital to the country’s ability to remain a competitive global economic power.
While the country undoubtedly has a head start on many of its African neighbours (97% of South African households have at least one mobile phone and 77.5% have internet access in one form or another), there is still important work to be done when it comes to unlocking the country’s digital potential.
Here, there are lessons from countries that have successfully digitised their economies to drive economic growth. China and Thailand provide two particularly salient examples of how it can be done.
China’s digital economy, for example, is now worth more than $7.5 trillion and accounts for 41.5% of total GDP. It’s been able to get to this point by focusing on the deep integration of the digital economy with the real economy. That hasn’t just meant digitally transforming existing industries but also creating new industries and ways of doing business.
Government policy has played a significant role in these achievements. Over the past five years, the digital economy has consistently been mentioned in the Chinese government’s annual work reports. Additionally, a series of related policies and plans have been rolled out, from Broadband China to Internet Plus and 14th Five-Year Plan for Digital Economy Development. Together, they have laid out measures for upgrading national infrastructure, bolstered the role of data as a production element, and promoted the digital transformation of industries.
Thailand, one of the fastest-growing digital economies in South East Asia, has reached $35 billion [1.21 trillion baht] with a growth rate of 17%. And with substantial investments in the Internet of Things, digital currency, and cybersecurity, Thailand can expect to see significant returns for some time to come. One of the key drivers for this growth is the 20-year Thailand Digital Economy and Society Development Plan (Digital Thailand Plan). Published by Thailand government in 2016, the two-decade strategy outlines r long-term policy goals with actionable and measurable targets which are divided into several phases. The first phase of the plan zeroed in on digital foundations including digital infrastructure, while the second phase prioritised digital inclusion. In 2023, Thailand is entering Phase 3 with the aim of achieving full digital transformation by 2027. The final phase (Phase 4) envisions Thailand as one of the global leaders in the digital economy.
Fortunately, the South African government is aware of how important the digital economy is to overall economic growth. In his weekly newsletter on 17 April, for example, President Cyril Ramaphosa wrote that investments in SA’s digital economy have grown exponentially:
“While all these investments contribute to economic growth and job creation, the investments in the digital economy will, in addition, propel our country into a new era of innovation and progress. Not only is the digital economy important for growth, but it is also vital to the provision of key services such as education, social services and health care.”
Minister of Communications and Digital Technologies, Mondli Gungulube further underlined the government’s commitment to growing the digital economy during Africa Tech Week in May this year.
“The Digital Transformation Strategy for Africa (2020 – 2030),” he said, “is in place with an overall objective to harness digital technologies and innovation to transform African societies and economies to promote Africa’s integration, generate inclusive economic growth, stimulate job creation, break the digital divide, and eradicate poverty for the continent’s socio-economic development and ensure Africa’s ownership of modern tools of digital management.”
“As the department we are committed to using this strategy as a tool to ensure digital transformation in the country and to this end, we have developed policies and programmes which speak to highlighted areas in the strategy,” the minister added. “The department’s digital transformation strategy focuses on four key areas: digital infrastructure, digital skills and talent, stimulating innovation, and industrialisation.”
But governments can’t build digital economies alone. The private sector also has an important role to play. It can a partner in building the digital economy, and not just when it comes to supplying and laying down the digital infrastructure needed to foster its growth. It should also help ensure that there is a pipeline of skilled talent ready to advance the digital economy event further.
Global experience shows us that the digital economy has the potential become a key driving force for economic development and social services in South Africa, especially once the energy crisis is resolved.