South African Business 2020 edition

OVERVIEW ICT Cloud

OVERVIEW ICT Cloud services have come to South Africa. Cape Town and Johannesburg recently became the first South African cities to host Microsoft Azure data centres. Microsoft will make available cloud services for Office 365 and Dynamics 365. Amazon Web Services (AWS) will set up a data centre in Cape Town in 2020 to serve Sub-Saharan Africa. The French government has officially designated the city as one of six global French Tech Hubs. The Industrial Development Corporation (IDC) estimates that spending on cloud services in South Africa will reach R11.5-billion by 2022, nearly three times its level in 2017 (Tech Central). This trend could generate more than 100 000 new jobs. Acuity Consultants was quoted in 2019 as saying that software developers’ salaries had risen by 30% in a year (Business Times). The Council for Scientific and Industrial Research (CSIR) in Pretoria will host a new body aimed at preparing South Africa for the Fourth Industrial Revolution (4IR), the South African Affiliate Centre of the World Economic Forum. Among the biggest investors in new technology are banks and other players in the financial sector, where technology is rapidly lowering the barriers to entry for new businesses. The Small Enterprise Development Agency (Seda) runs the SoftstartBTI ICT incubator in Midrand and Tuksnovation, a high-tech incubator, at Pretoria University. Several incentives relevant to companies and educational bodies in the ICT sector are available from the Department of Trade, Industry and Competition (dtic). The Information Technology Association (ITA) is the trade and employer body of the Information Technology industry in South Africa. The ITA represents more than 200 companies which supply information technology equipment, systems, software and services. Members include IBM, Microsoft SA, Siemens, SAP and Axiz. South Africa’s appetite for fast Internet connectivity is growing. The state-owned company Telkom controls most of the country’s fibre cable ONLINE RESOURCES Independent Communications Authority: www.icasa.org.za Information Technology Association of South Africa: www.ita.org.za State Information Technology Agency: www.sita.co.za Technology Innovation Agency: www.tia.org.za SECTOR INSIGHT IT skills are at a premium. but several smaller private companies are winning contracts to lay fibre-optic cables around the country. Allowing access to the Internet to rural people and poorer people in urban areas is a policy priority. As part of its mandate, the Independent Communications Authority of South Africa (ICASA) has organised that private operators have connected more than 623 schools. Dark Fibre Africa, a Remgro subsidiary, has established a Digital Villages unit to roll out fibre in low-income areas. Another company in which Remgro has a stake, Vumatel, plans to offer uncapped broadband services in Alexandra (Johannesburg) for less than R100 per month. Private mobile communications company Vodacom has pledged to spend R50-billion on network infrastructure in rural areas. Vodacom is also developing an affordable sheep-tracking collar with farmers in the Eastern Cape. There are 2 000 ICT firms in the Western Cape, with 17 000 employees. The Cape Innovation and Technology Initiative (CiTi) supports startups and entrepreneurs. SOUTH AFRICAN BUSINESS 2020 88

Banking and financial services New stock exchanges are attracting investors. SECTOR INSIGHT Discovery Bank has been launched. OVERVIEW On top of the recent issuing of new banking licences, South Africa’s financial services sector has also been enlarged with the opening of several new stock exchanges. The decision by pharmaceutical giant Aspen Pharmacare to conduct a second listing on one of them, A2X, suggests good timing by the people behind the latest trend. A2X has attracted nearly 20 companies in a wide range of sectors in less than two years, with a primary focus on secondary listings. Patrice Motsepe’s African Rainbow Capital is an investor in A2X. Of the four new exchanges, Equity Express Securities Exchange (EESE) trades in Black Economic Empowerment (BEE) while ZARX and 4AX are targeting companies that are not listed elsewhere. ZARX has agricultural holding companies like TWK and Senwes among its first clients. The JSE is the world’s 19th-biggest exchange and nearly 400 companies are listed on the JSE or AltX, the JSE-owned exchange for smaller companies. The green bond issued by the City of Cape Town is a sign of the “climate change” times. South Africa’s third-ever green bond attracted bids over R4-billion on an initial offering on projects worth R1-billion. The JSE intends opening a green section to deal with the expected growth of such instruments. The lead arranger for the bond was Rand Merchant Bank. In 2017 Tyme Digital received a licence to run a bank. By early 2019, TymeBank was available in 500 Pick n Pay and Boxer stores and more ONLINE RESOURCES Financial Sector Conduct Authority: www.fsca.co.za Insurance Institute of South Africa: www.iisa.co.za South African Institute for Chartered Accountants: www.saica.co.za South African Reserve Bank: www.resbank.co.za than 50 000 customers had an account. Tyme stands for Take Your Money Everywhere and refers to the fact that the bank does not have a branch network. The bank is targeting the lowerincome segment and promises speedy transaction and approval times. African Rainbow Capital began as the venture’s BEE partner but in 2018 bought out the Commonwealth Bank of Australia. Second to market among the country’s new banks was Discovery Bank, which officially launched in March 2019. Discovery Bank will apply the behavioural model it uses in its health business to reward good financial behaviour. The Discovery group is already a giant on the JSE (market value of R83-billion) with access to millions of customers. The insurance market now offers a greater variety of products to more market segments, including middleincome earners. An example of a specific product responding to new realities is Old Mutual’s iWYZE medical gap cover, designed to pay the difference between what a medical aid scheme is willing to pay and what the hospital or doctor is charging. 89 SOUTH AFRICAN BUSINESS 2020