South Africa's National Development plan delivery in ICT

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Job creation and government employment policies in the ICT sector Unemployment is a widespread global issue bringing with it both political and economic unrest in both developed and emerging countries from the US to the Eurozone. South Africa in particular struggles with high unemployment (STATSSA estimates a quarter of its population is unemployed) and while jobs are being created, the population rate is growing faster than the job creation rate. This paper explores the ICT industry in the South African context and considers whether current government policy will assist the industry to overcome its demand and supply challenges and be able to generate jobs as set out in the ICT charter and the National development plan. The South African Context

The table below shows the STATSSA official unemployment rate at 24,1% (however including discouraged work seekers brings this figure to over 31%) and is augmented by high levels of inequality with the World Bank estimated GINI index at 63,14 in 2009 (depicted in the Lorenz curve below)

Figure 1: South Africa’s Lorenz curves 1996-2009 Source: http://www.ihsglobalinsight.co.za The Lorenz curve is used to depict wealth distribution. The straight line shows perfect distribution and the difference between the two represents the GINI coefficient.

Table 1: Key labour market indicators Source STATSSA Quarterly Labour Force Survey: Q4, 2013

Overview of the ICT sector
The information technology and communication (ICT) sector is an integral component of the South African economy. The NDP 2030 ICT vision is that “ICT will underpin the development of a dynamic information society and knowledge economy that is more inclusive and prosperous. A seamless information infrastructure will meet the needs to citizens, business and the public sector… at a cost and quality at least equal to South Africa’s competitors.”(pg. 170) Growth in the ICT sector has been driven by mobile growth and in 2012 had contributed to 6% of GDP. (Gillwald et al, 2012) The main areas for future expected growth are internet and data usage, broadband speed and quality and ICT technologies. The 2014 WEF Global Information Technology Report which can be used to measure how prepared an economy is to maximise ICT to promote economic growth ranked South Africa 70th out of 144 countries. The report noted improvements in individual and business ICT penetration but cited lags in government use of technology to impact society; a weakness in skills development (97th); and high infrastructure costs that negatively impact affordability (112th). Research conducted on the industry in 2012 by the Small Enterprise Development Agency (SEDA) showed more than half of ICT firms are concentrated in Gauteng, with the Western Cape and KwaZulu-Natal ranked next. International firms like Microsoft, Hewlett-Packard and IBM are have offices in Gauteng. SEDA identified multiple opportunities (shown per province in appendix 1) and challenges faced by the industry including: 1.Skills shortage, which has a negative impact on innovation and affordability and drives up costs as businesses need to import skills. 2.Access to funding, including attracting foreign trade and foreign direct investment as the market is globally very competitive 3.Low market penetration in the domestic PC market

4.Infrastructure challenges, including the high costs of telecommunications and electricity. 5.Regulation
6.Fluctuating foreign exchange rates
According to SEDA, 12.78% of jobs created in 2010 were in ICT, with an increase in the number of jobs in the electronic components and communications, but a decrease in software and IT jobs. The Department of Science and Technology in line with the NGP’s call for the development of knowledge based economy with a focus on technology, e-commerce and financial services developed a 10 Year Innovation Plan to achieve this transformation, although given the low skills base of the country, it may be more economically...
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