South Africa’s ICT Sector Needs A New Path

Despite its successful political transition, South Africa’s digital journey is marked by stagnation, a contradiction highlighted by recent TechFinancials report. The article highlights SITA’s operational challenges and the growing trend of government departments bypassing the state’s shared IT procurement framework in favour of direct private IT services, often from vendors with questionable B-BBEE credentials (SA Home Affairs Seeks Divorce From SITA, Eyes Private IT Partners)

This phenomenon underscores a fundamental constraint on South Africa’s digital transformation: the state’s ongoing struggle to reconcile its developmental aspirations with the stubborn legacies of neoliberalism, a tension acutely evident in the ICT sector’s structural and policy fragmentation, and the resultant disjointed efforts of state-owned entities.

Telkom: A Missed Chance for Digital Transformation

And yet the South African government’s majority stake in Telkom, a JSE-listed entity with a vast converged network, presents a significant opportunity for driving development and supporting key public services.

National government holds a significant stake in Telkom, with a direct ownership of 40.5% and an additional 13.6% through the Government Employees Pension Fund, bringing its total stake to 54.1%.

There is little doubt that government departments like Health, Education, and Home Affairs, which depend on advanced biometrics and digital functions, would greatly benefit from a unified strategy. The current systemic dissonance, characterised by a structurally fractured ecosystem of state-owned entities operating in silos with overlapping roles and unclear responsibilities, results in a rather glaring disconnect between the service experience (infrastructure, digital services, and cyber risk management) and the needs of critical public services.

This disjointed approach not only negates the state’s ability to drive a cohesive connectivity strategy and regulate the market for affordable broadband but also exacerbates existing digital divides and socio-economic challenges. In today’s hyper-connected world, where reliable internet access is the lifeblood of education, healthcare, and commerce, the state’s inefficiencies stand out sharply, compounded by unclear policy priorities.

The paradox here, is that while Telkom generates valuable revenue for the government, this rent benefit to the fiscus is offset by the inefficiencies of other state institutions in the Department of Communications. Rather than leveraging Telkom’s profitability to support key public services like Home Affairs and SABC, which struggle with governance issues and financial losses, the state is essentially bleeding the same resources through a dysfunctional ecosystem. A more cohesive and strategic approach to managing its assets and resources is long overdue.

Rebooting the State: A Case for Consolidating South Africa’s ICT Entities

To fundamentally reshape state digital capabilities and public broadcasting, a bold, yet radical move would be to converge SITA, Broadband Infraco,  SENTECH, and SABC into a single State Technology and Broadcasting Services entity, creating powerful synergies across its core functions. This entity would encompass a robust infrastructure arm responsible for national network and data centre capabilities, a vital digital services arm dedicated to areas like cybersecurity and platform support, and a focused content arm – the public broadcaster – which would concentrate on creating and delivering public service content via the integrated national digital infrastructure, free from commercial obligations.

Given the failure of the current public broadcasting model at the SABC and Sentech, coupled with the global shift to IP-based platforms, the proposed convergence demands robust policy frameworks, institutional innovation, and leaders with diverse, cross-sector experience to facilitate seamless technological integration.

Global Insights: Guiding Principles for a Smooth Digital Shift

This streamlined approach, informed by World Bank IC4D research and drawing inspiration from successful state integrations in South Korea, Singapore, and Australia, would eliminate redundancies, reduce costs for taxpayers, and optimise digital transformation spending. By leveraging Telkom investments strategically, the government can accelerate technological progress and accelerate the delivery of essential public services such as education, healthcare, and governance.

While some independent operators might view consolidation as a potential threat or a step towards nationalisation of Telkom, a streamlined state technology entity would actually create significant opportunities for the private sector. A consolidated state-owned ICT ecosystem would deliver sound governance, operational efficiencies, and enhanced financial capabilities, enabling the issuance of bonds and access to capital markets for strategic growth and further investment. By eliminating redundancies, structural duplicities, and inefficiencies, the new entity would offer a more attractive and sustainable partnership landscape for private sector engagement compared to the current fragmented and wasteful architecture.