South Africa - undermining economic growth

South Africa: Slack Telecoms 'Hurt SA's Economic Growth'

SA's significance in the world economy is at risk of being eroded by its lack of internet access and high cost of telecommunications.

The Networked Readiness Index cites a lack of competition in the telecoms sector as a prime factor hindering SA's economic growth and social development. Low internet penetration, the minuscule degree of high-speed broadband access and high costs are the worst constraints. Erratic power supplies and a lack of engineers and technicians also inhibit SA's development .

The report by the World Economic Forum studies the effect that information and communication technology (ICT) has on the development and competitiveness of 127 nations. SA now ranks 51st, down from 47th last year, continuing its plunge of 10 places from 37th the previous year.

Although SA has a good business and regulatory environment on which to build, the benefits of that are diminished by a lack of competition.

"To move ahead, SA will need to act decisively in promoting competition and encouraging public and private investment in ICT infrastructure," the report says. The need to invest more in technology infrastructure has become urgent, "to ensure the opportunity is not missed as the rest of the world launches into improved competitive-ness".

The size of the challenge is highlighted by a widening gap between SA and countries that follow best practices. In such countries, 63% of citizens have internet access, compared to just 11% in SA. The level of broadband penetration is equally divergent, with 25% in best practice countries and less than 1% in SA, partly because broadband availability costs seven times more.

Although the high take-up of cellphones is allowing people to access the internet by wireless, the pared-down applications used on a handset have far less economic benefit than full internet access via a PC and a high-speed fixed line.

The index is sponsored by networking technology giant Cisco, which says modern technologies have fuelled growth and increased productivity in many countries by cutting communications costs, encouraging online collaboration and speeding up the flow of information.

The Economist Intelligence Unit and IBM this month na-med SA a star performer in the Middle East and Africa for how much use it makes of ICT. That research rated SA as the region's top country for the quality of its legal framework and for the rate at which e-business practices are adopted.