South Africa is struggling with low growth. One way it can accelerate growth and improve employment is to put five key things in place to foster the move to an economy which incorporates digital platforms. Business leaders are taking the lead, but they face five obstacles.

South Africa is a country struggling with high unemployment and anaemic growth. The South African economy contracted by 1,4% in the fourth quarter of 2019, following a contraction of 0,8% (revised) in the third quarter. These are the lowest rates in sub-Saharan Africa, according to the World Bank.

So what is the good news? The Fourth Industrial Revolution contains the promise of a “platform economy.” In a world-wide survey, four out of five executives (81%) said digital ecosystems are transforming the way their organizations deliver value. The platform revolution is disrupting industries and dramatically changing how business is done. Linear, resource-heavy, producer-driven industrial business models are giving way to many-sided, demand-driven platform models. Companies can now create ecosystems with their businesses at the centre, changing the very way they compete and create new value.

And even though South Africa is already home to the highest number of digital platforms in sub-Saharan Africa, it’s still not considered “platform-ready.”

South Africa ranks 14th out of 16 G20 countries on the Accenture Platform Readiness Index and is expected to remain in this position in 2020.

The index benchmarked G20 countries on factors that create an enabling environment for digital-platform adoption.

South Africa ranks near the bottom. Why? A poor enabling environment. Let’s unpack each of these five categories one by one.

1. Digital-user market size and savviness: The scale of the market matters. South Africa has a relatively small digital customer base, and South African consumers make limited use of internet channels to transact, which indicates low digital savviness. South Africa’s opportunity is to build out our platforms to other countries in the region. The more users a platform has, the more useful it is.

2. Open innovation culture: Innovation relies increasingly on collaboration. South Africa spends just over $2 billion on research and development; a modest investment that indicates a lack of innovation. Central to a platform economy is the willingness for stakeholders to work outside their traditional boundaries. One opportunity is for large companies to create structures, processes and governance to manage open innovation. Government can help by fostering innovation hubs which bring together laboratories, universities, start-ups and large businesses. Importantly, we cannot do everything ourselves – and by leveraging the open innovation ecosystem we can find partners that can perform some of our tasks far more effectively and efficiently.

3. Technology readiness: Information and technology assets in South Africa make up only 8% of our total assets—half of the 15% in other G20 countries. In fact, we’re in last place for Technology Readiness. Two drivers of platforms include AI and the Internet of Things (IoT), both of which are being hampered by our lack of readiness.

4. Digital talent and entrepreneurship: Without digital skills, taught as science, technology, engineering and mathematics (STEM) at universities, we don’t have the ability to build the platforms in the first place. South Africa has few STEM graduates. STEM skills must become an educational priority for governments, and must be nurtured by businesses to grow the talent pool.

5. Adaptive policy and regulation: For companies to invest in a country, they need reassurance that the legal framework will protect them. For digital platform companies, it’s exactly the same. While South Africa has a strong judiciary and a history of protecting property rights, it lags when it comes to data protection and regulation around cybersecurity. There is little supporting digital legislation, and few frameworks to guide or incentivise digital adoption or growth.

The good news is, according to Accenture’s Tech Vision survey in South Africa, almost two thirds of local executives are already taking steps to participate in digital ecosystems, albeit at a slow and more moderate pace due to uncertainty regarding future markets and cybersecurity issues.

The way forward is clear: companies can lobby government to implement policy and legislation that will unlock digital value; and companies themselves can take the lead by involving more stakeholders in their innovation and platform efforts.

Accenture is proud to have successfully led transformation programs that have resulted in South African companies developing platforms which have improved turnover and profitability. To find out more, please click here for the full research report, or contact us directly.