Critical role for DFIs as 4IR takes centre stage at GovTech 2023
Ms. Mathapelo Malao - Head of Energy, Environment, and ICT at DBSA
The role of digitisation and digital transformation in commerce has become more pivotal than ever as many businesses have now embraced the shift towards a hybrid working culture and customers are beginning to adopt numerous online channels as a means to reaching more markets and clients.
As the tech industry prepares itself for the GovTech conference, policy makers should be using this opportunity to engage industry on the need to create a diverse Information and Communication Technology (ICT) skills ecosystem, the need to scale up the level of digital transformation and inclusive growth in the ICT sector, and most importantly addressing the concerns pertaining to how jobs will be repurposed to benefit the Fourth Industrial Revolution (4IR)
Two significant opportunities exist for South Africa, firstly to build domestic digital infrastructure, skills, and capabilities, including identifying key areas where digital platforms and services can improve South Africa’s competitiveness in localisation and to position South Africa as a regional hub for digital services and ICT infrastructure, data centres, digital technologies, and a focus of knowledge for data governance and the digital economy.
The role of Development Finance Institutions (DFIs) and specifically our mandate, is to promote economic growth as well as regional integration for sustainable development projects and programmes in South Africa, SADC, and the wider Sub-Saharan Africa in the area of telecommunications and broader infrastructure development which intend to make significant strides in the ICT sector.
As DFIs, we have shared ambitions to grow our ICT loan book by supporting commercially sustainable projects in the areas of digital and fibre infrastructure, datacentres, telecommunications, fintech as well as smart cities.
DFIs persist in the drive to identify high yielding ICT investments that are economically sustainable and projects that have the potential of transforming the lives of ordinary citizens. The existing rural connectivity initiatives remain quite central to our ICT strategy at the DBSA and as such we are also pursuing several opportunities in this area.
Successfully completed ICT infrastructure projects include the Dark Fibre Africa, which is an open access fibre optic provider which received debt funding from the DBSA; Teraco Data Environments, a data operations centre, where the Bank provided senior debt funding alongside the International Finance Corporation and Bit Pesa (which is a digital payment platform) to name a few.
The DBSA’s ICT funding focus is on the inclusion of sustained growth in developmental impact opportunities, the provision of funding solutions for infrastructure development and ensuring that the bank maintains financial sustainability supporting funding opportunities that are commercially viable that have a high level of developmental activities.
Finding long lasting solutions to socioeconomic challenges is crucial to ensure equal access to digital technology. One solution is through entrepreneurship. Entrepreneurship helps economic growth and creates jobs. As a DFI, we are well poised to design and package funding solutions specifically aimed at enabling entrepreneurs in the ICT sector. This is especially true for businesses in the technology, analytics, manufacturing, and telecommunication sectors that require considerable funding to expand.
At GovTech 2023, we will look into the advancement of smart cities where we have been working alongside state institutions and municipalities in the pursuit of ICT services in urban and rural areas, in order to improve the quality of life, efficiency of urban operation and wider services to citizens.
Smart cities will promote the use of technology in addressing urban challenges and thus the use of technology should be used to manage urban challenges and industrialisation through the use of technologically driven solutions. DFIs need to be able to fund state institutions as well as private sector institutions with credible ideas and solutions to help develop smarter cities. Building smart cities is an innovative strategy that assists in making city life easier for its residents and growing the national economy. We need to commit to helping the cities in the sub-Saharan region realise this dream through digital infrastructure development.
Another key area that that DFIs are making a priority is the funding of high impact ICT projects that unlock digitisation and ICT connectivity in rural areas across the African continent, this is in line with all developmental financial institution developmental objectives and thus ensuring that rural citizens are not left behind as the world transitions itself into a new digital age.
As a state-owned entity, we are making significant strides in the funding of infrastructure development and continuously seek opportunities across the ICT value chain. We finance and prepare a wide range of projects including international connectivity, backbone and network infrastructure, towers, fibre, undersea cables, data centres, satellites and fintech solutions.
We follow an integrated approach to ICT infrastructure development prioritising five key project lifecycles, these include planning, project preparation, financing, construction and maintenance and the bank offers a comprehensive suite of products and services which include arranging and underwriting of debt, on balance sheet debt structures, project finance (ring fenced based), BEE funding, credit guarantees and first loss instruments, blended loans, subordinated (mezzanine) debt instruments, sculpted and structured loans and tenor extension through the catalysing of private sector partnerships.
The government through conferences such as GovTech, play an important role in stimulating private sector investments in the ICT industry. Where the 4IR is concerned, there are many exciting new opportunities for repurposing existing public institutions and opening up to disruptive new possibilities which are beyond the realm of our current policy and implementation discourses.
4IR offers one of the best development and advancement opportunities in Africa and the world and it is therefore crucial to focus on ICT solutions that are aimed at redressing socioeconomic issues that could exacerbate digital divides and also ensuring massive skills development and repurposing of jobs.