S.Africa’s broadband global ranking bad for economy - CNBC Africa

S.Africa’s broadband global ranking bad for economy

Southern Africa

by Thando Matutu 0

South Africa’s low ranking on the Akamai state of the internet report for broadband could diminish economic growth. PHOTO:Getty images

“It is widely proven that broadband is essential for a growing economy and useful for social cohesion. It enables the public sector delivery to be much more effective. South Africa risks the wheels on the economy as it won’t move as quickly as the other countries,” Russell Southwood chief executive officer of Balancing Act told CNBC Africa.

Balancing Act is a UK based telecoms consultancy company.

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The World Bank reported Mauritius as the most economic competitive country in Africa. The country was ranked on 45th place on the Global Competiveness Index 2013 -2014.  The GDP growth rate is projected to increase to 3.7 per cent for 2014 and the ICT sector contributes 6.8 per cent to the GDP.

The free trade regulations by the Mauritian government have allowed competition within the ICT sector. With 600 ICT companies in Mauritius economic competition was created and has attracted Foreign Direct Investment to expand broadband technology development in the country.

(WATCH VIDEO: Data market in Africa set for a double digit growth)

The lack of cohesion between government and ICT operators has been seen as one of the reasons for low broadband development in South Africa.

“The problem has many sources but the easiest would be to blame the government. The government is not doing enough to encourage the roll out broadband. Some blame the major players in the market, the mobile operators who are used to high levels of profit taking. Investing in data is much more complicated, costly and is a not short-term investment,” said Southwood.

While some perceive government infrastructure and lack of skills as the chief contributor to the problem. Some South African mobile operators have reluctance to invest in data technology.

“In the old days it was possible for those mobile operators to get a return in six to nine months on a base station. [However], data is much harder to get those returns,” he said.

The South African mobile operators had been making high profit margins and broadband development technology requires long term investment in infrastructure such as fibre to home wiring. If there’s no change in mind-set the opportunity for expansion could be lost.

(WATCH VIDEO:South Africa’s broadband is below world standards)

“It has to do with attitude to risk and the ability to engage with the market. South Africa has a potential of a million or a million and a half of broadband subscribers. It’s a bit shocking that the South African [mobile operators] have not infiltrated the market,” said Southwood.

BY: THANDO MATUTU

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