SOUTH AFRICA AND THE FOURTH INDUSTRIAL REVOLUTION
The world is changing. Drones are fighting in armies, driverless cars are no longer a fiction of someone’s imagination, robots have the ability to outsmart humans in offering legal and financial advice. Exciting? Most definitely. But for a developing country such as South Africa there is also a sense of uneasiness. How will our economy keep up with a changing world while having to fight poverty, inequality, corruption? As one of the most unequal societies of the current age one has to wonder what technological advances will do to the already high Gini coefficient? Are we entering a dystopian world order where some countries will ride the wave of a revolution and others will be left behind, feeding on the scraps?
Prof. Klaus Schwab from the World Economic Forum has proposed that a fourth industrial revolution is imminent. An industrial revolution is seen as a change in the basic economic structure, driven by innovation and invention. In the late 18th century coal and locomotives introduced the first industrial revolution with mechanization being the key driver. The fourth industrial revolution will fundamentally change the world that we live in through so-called cyber physical systems where the natural, human and digital world meet. In short, extreme automation and connectivity might mean that boundary lines between humans and technology are blurred with concepts such as artificial intelligence, virtual reality and the internet of things taking civilization where it has not gone before.
While South Africa’s economy relies heavily on its natural resources the question is whether the country has progressed sufficiently on the ladder of previous industrial revolutions, or rather whether a platform has been created from which to launch into the rising age. One simply has to look at the state of railways and even the huge amount of manufacturing that happens off-shore to wonder whether South Africa has been able to progress industrially with the rest of the world. UBS highlights in a white paper (Davos 2016 White Paper) that South Africa is behind the curve with regard to the evolving of manufacturing along with demographics. In effect, the failure to move to high level of manufacturing with the demographic prime could indicate that SA has not adequately adapted to the second and third industrial revolutions.
The question remains whether the fourth industrial revolution would be a case of keeping up with the Joneses or whether it would be possible to fast track development in order to launch South Africa into the new era.
Africa is a continent that upholds a certain reputation for innovation particularly to overcome obstacles often created by the lack of development in a certain area. The continent is also seen as an early adopter of technology, with success stories of financial applications such as M-Pesa flying the flag for an innovative continent. Pockets of excellence mean that it is not all doom and gloom for South Africa. The financial sector is one of the best in the world and may well be a field in which new technologies will get traction.
The WEF looks favourably towards South Africa in terms of innovation and new fourth industrial revolution indexes in their Global Competitiveness Report (2016-2017) (WEF – Global Competitiveness Report ) with the following global ranks: innovation and sophistication (31st), business dynamism (50th) and innovation capacity (38th ) perhaps indicative of the silver lining of promise that the country will punch above its weight in the revolution.
Although ranked low in basic requirements and some efficiency parameters indicating a lag in fully adapting to previous industrial revolutions, positive innovation rankings paired with the right industry, such as financial markets, could position South Africa favourably in terms of moving towards the fourth industrial revolution.
It would be easy for South Africa to adopt a fearful approach towards the new era of automation and robotics. In a country with high unemployment low-skilled workers are likely to face a world where the job-market has no space for them. Some pessimists are predicting a world where humans are not needed. The reality is that change is coming and being a country that is able to adapt is non-negotiable. Education has been a pain point and South Africa is ranked a low 123d on the Global Competitiveness index for Health and Primary Education. Education is a critical factor to the challenges that a new revolution would bring forth and ensuring that a new generation can hold their own in a changing world will make the difference between those running the race well and those falling out along the way. Adapting education models is an important measure to be put in place if South Africa wants to approach the fourth industrial revolution with courage.
In our experience, it is evident that successful disruption is often birthed within a start-up atmosphere. Where current incumbents, especially in the financial sector, are faced with issues such as integration and legacy systems, a start-up with a dedicated and talented team and a great innovative idea have a greenfield approach that lends itself toward disruption.
Drawing the parallel to country-wide development there is a case for cheering on Africa and South Africa’s jump to the fourth Industrial Revolution modelled as a start-up with leeway to embrace the new era and its corresponding shifting boundaries. Leapfrogging some of the essential factors of previous revolutions toward a new disruptive way of using computer systems to address fundamental social problems. But investments in skills, particularly software development and the required infrastructure will need to be fast-tracked to create an enabling environment for the innovative nature of South Africans – to not just keep up with the rest of the world but to leverage a strong innovative culture and excel.
by Charlotte Hauman
