SA government factors in Africa’s growth, IT in its fiscal plans

South Africa’s Minister of Finance Pravin Gordhan delivered his 2013/2014 Budget Speech before parliament this week and highlighted government’s plans to spend on infrastructure, on support for small business growth, on job creation and reduction of inequality and poverty towards a more sustainable future  – widely accepted as being top priorities for national development.

South Africa's Finance Minister, Pravin Gordhan. (Image: File)

Although media reports suggest that ICT was not afforded much attention in the Budget, there were some ‘take-aways’ from the Speech. Under the heading “Growing the Real Economy” Minister Gordhan said the State recognises the key role that private companies play in the economy and mentioned that plans are afoot for two telecommunications investments amounting to R14billion this year.

Government spending on infrastructure to support national development and address public service inefficiency represented a key component of the Budget address.

There is no doubt that technology, whether software or hardware or both, will form some part of the game-plan used by authorities to implement strategy. That has been a chief element of the government’s national development plan for some time.

According to IDC figures published in media reports, in 2011, four main verticals, representing home and public sectors, transport, communications and utilities, as well as the combined finance industry, accounted for 72.6% of total IT spending in SA, representing an increase of 7.1% year-on-year in 2011.

Forecasters at the global research company suggest that the country’s IT market is the biggest in Africa and will remain so throughout the period under review of 2012 – 2016.

Communications has also been identified as a priority area for government. According to the Budget Speech, government has earmarked R89 million for transport, energy and communications next year.

Furthermore, the state owned enterprise Sentech will receive R599 million over the medium term for the migration from analogue to digital terrestrial television.

The Department of Science and Technology will recieve R2billion to support the Square Kilometre Array (SKA) Project.

Official government online pages have confirmed the important role that Information and Communications Technology (ICT) can- and does play in helping SMEs gain traction in markets.

In terms of its own procurement procedures, the State seems to be saying all the right things – the Finance Minister also emphasising the value that the introduction of a Chief Procurement Office (CPO) in keeping processes and procedures for the acquisition of services – including those to do with technology – in line.

Africa’s rising noted

South Africa has long been considered the ‘economic powerhouse’ of Africa and the State’s emphasis on trade partnership with Africa reflects acknowledgement of what Minister Gordhan described as “the global shift of economic power from West to East,…” and the “rise of Africa”.

Trade agreement with Africa is a critical facet of South Africa’s national development plan, with statistics revealed in the speech confirming that the continent accounts for approximately 18 percent of the country’s total exports and almost a quarter of manufactured exports.

In the knowledge that trade between South Africa and its neighbours is generally understood to be mutually beneficial (resulting in job creation, tax revenue and dividends for SA, and the provision of support for development in trade partners), the State has reaffirmed its plans to make doing business in Africa easier.

“A number of measures are proposed to relax cross-border financial regulations and tax requirements on companies, making it easier for banks and other financial institutions to invest and operate in other countries. Similar measures will apply to foreign companies wanting to invest in African countries using South Africa as their regional headquarters. The outward investment reforms that apply as part of the Gateway to Africa reforms will also pertain to those companies seeking to invest in countries outside Africa, including BRIC Countries,” said Minister Gordhan.

Chris Tredger, Online Editor