The Presidential Commission Report on the 4th Industrial Revolution makes several strategic recommendations, but it needs to be followed by agile policy and regulation

The Presidential Commission on the 4th Industrial Revolution (the Commission) was tasked with drawing up a strategy to enable South Africa to participate fully in the fourth industrial revolution (the 4IR). Its report was published on 23 October 2020.

The report makes recommendations on the following workstreams: (i) integration, programme management and communications; (ii) socio-economic impact (which was further divided into the following sub-categories: science, technology and innovation, infrastructure and resources, human capital and future world of work, capital markets and financing and commercialisation and industrialisation); and (iii) policy and legal.

Our view

The Commission conducted limited stakeholder consultation and its report is a first draft. In light of this, the report offers insufficient detail on how its proposals will be delivered, by whom, the financial resources which will be required and how success will be measured. This detail will be critical to engender public support, avoid wasteful expenditure and foster a culture of accountability for any failures.

The report also proposes to establish several funds (for example a risk capital fund) and state-owned entities or institutions. It will be important for the Commission to reassure stakeholders and the general public that these funds and state-owned entities will be protected from mismanagement, which has been a recurring problem in South Africa.

It is encouraging to note that the Commission concedes that, to be successful, the proposed 4IR strategy must be anchored by an enabling, relevant and agile policy and regulatory environment.

Below are some of the Commission’s key recommendations.

Socio-economic impact

Technology

The Commission analysed various 4IR technologies which could alleviate the challenges experienced in various key economic sectors of South Africa. For example, in the energy sector, digital technologies and other 4IR technologies can deliver smarter energy supply planning and demand management; smart energy storage; the transition to virtually controlled/managed power plants and 3D printing of energy infrastructure components. In the water and sanitation sector, smart water meters can drive responsible domestic and industrial water use. Smart water, sanitation and hygiene solutions can also become health and disease monitoring tools.

Commercialisation and industrialisation

The Commission proposes that South Africa utilise the technologies occasioned by the 4IR to enable commercialisation, upgrade existing industries and create new ones.  South Africa should ensure that:

• home-grown innovation is not lost to other markets; and
• small, medium and micro enterprises are positioned to commercialise 4IR home-grown innovations and build these to global scale and relevance.

Human capacity and the future of work

The Commission notes that 4IR technologies will continue to change the South African labour market, and recommends that:

• a human capacity strategy should be developed which focuses on future areas of work while strengthening current sectors for maximum job retention and job creation;
• there should be continued investment in current focus sectors, such as advanced manufacturing, tourism and agriculture;
• there should be investments into emerging sectors of the 4IR, such as the digital economy, green economy, social economy, creative economy and the gig economy;
• identifying relevant future skills and designing artificial intelligence-driven technology platforms will be necessary to support a skills pipeline;
• continued dialogue and co-ordination between labour and business is needed regarding an appropriate response to the 4IR which prioritises growth and leverages job creation.

Capital Markets and Financing

South Africa needs to mobilise capital for its 4IR strategy to be fruitful. The Commission recommends that:

• various policy and regulatory challenges must be addressed, including policy uncertainty, misalignment of government efforts, exchange control and intellectual property laws, tax inefficiencies and competition regulation;
• a 4IR innovation pipeline should be developed, based on public-private partnerships;
• the ease of doing business must be improved to attract capital into the country;
• SMMEs that are ready or have the potential to build 4IR-aligned business models, products and services should be aggressively supported, funded and scaled for growth;
• early-stage risk capital should be made available to small and growing businesses and new innovative funding models should be explored;
• a 4IR-specific risk capital fund should be established through public-private partnerships.

Infrastructure

For South Africa to prepare for the 4IR, it is urgent to connect people and businesses to the internet using digital infrastructure (defined as infrastructure that can collect, store and make digital data available across a number of systems and devices). The Commission recommends implementing the 5G licensing process through a 5G express policy and strengthening the country’s cybersecurity policies and capabilities.

Policy and legal

Government should strengthen its capacity to regulate certain areas, including data policy, artificial intelligence, education, the future of work and research ethics and innovation. The following principles are proposed, after stakeholder consultation, to guide the development of integrated policy and legislation:

• policy must be inclusive in its process and all sectors of society must be afforded an opportunity to participate in policy formation;
• the duplication and fragmentation of infrastructure development must be avoided;
• policies and laws must be drafted with South African entrepreneurs in mind;
• the policy approach should be agile, flexible and future-oriented;
• all proposed policy and legislation should be subjected to the social and economic impact assessment system (SEIAS), to minimise the unintended consequences (such as unnecessary costs from implementation and unanticipated outcomes) of policy initiatives, regulations and legislation.

Recommendations

The Commission made the following key recommendations:

• The education system should be redesigned through a co-ordinated, robust, multi-stakeholder process and certain skills, such as problem-solving, computational abilities, thinking systematically and mastering the social world, should be emphasised;
• An artificial intelligence institute should be established
• The manufacturing sector should be supported by a state-led research initiative focused on advanced manufacturing and new materials
• Government’s cybersecurity capacity and capabilities should be strengthened by appointing a chief data officer and state-owned company Comsec should be strengthened with a mandate relevant to the requirements of the 4IR
• Future industries, platforms and applications of 4IR technologies should be incentivised through subsidies and tax breaks
• Build 4IR infrastructure
• Review and amend (or create) policy and legislation, particularly the Sentech Act, Space Affairs Act, the Disaster Management Act and the South African Weather Services Act
• Establish a 4IR strategy implementation co-ordination council in the presidency.

Written by Ziyanda Ngcobo, Senior Associate at Webber Wentzel