SA bridges digital divide to bolster township economy

The Fourth Industrial Revolution, the township economy and skills development are often cited as key economic drivers in South Africa. Together, these three things have the potential to change the country’s economic trajectory, but without digital access, investing in them is like buying a car, but never putting in fuel.

The digital divide  means those living in rural or informal areas and townships- who are most likely to need the  economic opportunities and skills that come from digital access- are also the most underserved.

There is therefore a need to improve access in underserved economies such as townships and informal settlements, and a number of businesses in South Africa are working to provide  high-speed affordable internet and digital tools to help the economy prosper.

Infrastructure builds bridges

Studies show that improving connectivity between formal and informal sectors- including through digital access, can bridge both spatial and economic divides.

“As a technology that is far more efficient than its predecessors, 5G has proven internationally that it can be an incredible enabler of development in underdeveloped areas,” said Vanashree Govender, media and communications manager for Huawei South Africa. “Besides its efficiency, 5G can also provide much wider coverage, which can enable a lot of SMME development in the township economies,” she added.

“The company has supported South African operators to build more than 2800 5G base stations and has more than 1000 registered SMME partners. 5G mobile broadband and mass, high-speed connectivity – are empowering to entire communities, including students, job seekers, entrepreneurs, and professionals,” Govender said.

Airbnb meanwhile is working to bridge the digital divide in the township tourism sector. Over the next two years, Airbnb will work with Ikeja to provide at least 100 Airbnb Academy Hosts and their communities with free Wi-Fi. Each of these  hosts will become a WIFI hotspot within their community, giving 100s of others access, resulting in a powerful network effect.

Expanding market access

E-commerce is fast changing the retail landscape, allowing businesses to reach customers who may not be in physical proximity to them.  Spurred by the pandemic, e-commerce has seen  massive growth in South Africa over the past two years. In 2020, South African e-commerce sales grew by 66% and now account for double the percentage of retail sales they did before the pandemic.

Township and informal businesses however face numerous challenges when it comes to e-commerce, ranging from lack of digital access, to poor town planning which can make delivery difficult. But access to the right tools and platforms can be a boon for businesses.

Boost for township travel entrepreneurs

Growing access to markets for township travel is one of the bigger stumbling blocks for many in the business, but technology now gives them a fighting chance.

According to head of marketing and communications for online booking platform Jurni, Tshepo Matlou, “The biggest barrier for township accommodation providers and travel operators is marketing their offerings. The quality of the offerings is good but access to the market remains a big hurdle for many people and we’ve witnessed technology change the situation for some of them.”

He says that in a world where travellers look for, book and pay for stays online, “a digital footprint is a must”.

“Over the past decade the picture of township tourism has evolved from a ‘poverty stricken’ narrative to one of cultural diversity, and the township economy has to leverage this shift to create and sustain employment and productivity,” adds Matlou.

A new future for SMEs

Customer expectations have placed demand on businesses for easy, quick and sometimes even free delivery options. Driving the growth and development of infrastructure will improve last mile delivery, making it more accessible for businesses. This applies especially to SMMEs outside of the main business hubs, who can find it difficult to compete with larger enterprises on this point.

Emerging technologies are playing a huge role in enabling businesses to meet this high consumer demand when it comes to last mile delivery.

“Businesses often have to deal with costly and inefficient last mile delivery due to challenges such as unpredictable timelines, the need to make multiple stops with only a small number of parcels being dropped off at each destination, congested traffic and more,” says Karmany Reddy, head of strategy and operations at Orderin.

“Digital technologies such as Artificial Intelligence and data science can improve last mile delivery by finding the best routes to take to avoid traffic, the most efficient use of fuel, and predict demand and labour requirements. These technologies play a crucial role in enabling dynamic predictive models which permit our customers to circumvent these challenges at the speed needed for successful delivery”.

South Africa’s fintech sector

Developments in the fintech space are driving financial inclusion for businesses and customers alike, with several digital payment innovations emerging from South Africa in recent years, some of these, like Selpal, Lipa and mojaPay focused on businesses in townships and rural areas.

“Not even that long ago, checking out on an e-commerce platform could last days as you waited for EFTs to clear. But the rise of new fintechs means that payments have become instantaneous. These developments have the potential to revolutionise the informal business sector where the majority of users online are mobile, making it easier and safer to transact,” says Tony Mallam, MD of fintech upnup.

Building skills for 4IR

Zuko Mdwaba, area vice president of Salesforce South Africa, feels that we should not solely rely on the government to provide answers for digital access.

Mdwaba says, “We cannot assume that digital access and equality are the government’s only concerns. They won’t be able to do it on their own. Corporates must join in and contribute to the solution. ”

Both the public and private sectors have a responsibility to unlock critical upskilling, reskilling, and digital literacy within the current and future workforces in order to prepare individuals for the future of work and create the capabilities to effectively drive innovation and growth,” he said.

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