South Africa

An IT Profile

The Rainbow Nation

The People

Census figures are widely believed to be inflated; latest figure is 44,000,000 and falling because of HIV-AIDS. Median age is about 24. (US=36) The death rate is 22/1000 (US=8/1000)– 79% classified themselves as African– 10% as white – 9% as coloured, and – 2.5% as Indian/Asian.

White and coloured population proportions are falling and have been since 1990.

Ethnic Groups (High heterogenity implies potential for conflict)

• Nguni people (2/3 of population) • Sotho-Tswana people, who include the

Southern, Northern and Western Sotho (Tswana);

• Tsonga; • the Venda (far northeast)• Two white tribes: Afrikaners; English• Khoe and San (collectively the Khoisan), the

original inhabitants

Languages

• Over 30 languages are spoken commonly in South Africa

• 11 Official languages; English WIDELY spoken and used for business, gov’t. Regionally languages are usually English+ (Afrikaans+) local African language

Afrikaans (13%), English (8%), IsiNdebele, IsiXhosa (18%), IsiZulu (24%), Sepedi, Sesotho, Setswana, SiSwati, Tshivenda and Xitsonga.

Geography

• Half the population is urbanized; large country

• Capitals are Cape Town (legislative), Pretoria (executive) and Blumfontein (judicial).

• Major ports are Durban, Port Elizabeth and Cape Town

• Good road network linking major centres (50,000 miles); many rural areas are quite isolated.

• Largest city is Johannesburg (5 Million)

Geography

Africa

Namibia

Botswana

Zimbabwe

Moz

ambi

que

Atlantic O

cean

Indi

an O

cean

Swaziland

Leso-tuCape Town

Johannesburg

PretoriaEquator

Tropic of Capricorn

CIA Factbook

=Texas x 2

History (much longer than you need to do)

• Inhabited by Khoi (hunter-gatherers) and San (herders) people for thousands of years until 1500s

• First Europeans landed on west coast were Portugese sailors; British put the flag up first; Dutch had first permanent settlement Kaapstad in early 1600s.

• By 1700 Cape Town was a thriving way-station between Holland and “Dutch” east Indies

History-2

• Dutch and later English settlers decimated Khoisan people, reducing them to slavery*

• Nguni (Zulu) people under leader Shaka created military state in north and east in early 1700s and put pressure on others living nearby to join or leave.

• At same time, Dutch were leaving Cape Colony for freer locales northeast

* Along with other slaves brought in from Indonesia and Madagascar, this mass of people formed what was called the “Cape Coloured” group, ancestors of today’s “Coloured” people.

History-3

• This created inevitable and incessant conflict not unlike American experience between “Indians” and settlers.

• Many wars were fought between Dutch/English and indigenous people; Europeans eventually conquered all.

• By 1800s, English took over Cape Colony and formed new colony of Natal around Durban.

History-4

• This also created conflict with Dutch-speaking settlers (“Afrikaners”) who left to form two new states in north and east (Orange Free State and Transvaal)

• When diamonds and gold were discovered at Cape/OFS/Transvaal border, the English, under John Cecil Rhodes, attempted to annex the Afrikaner republics

History-5

• This resulted in the Boer wars (1900). • The English won and established a unified

country (Union of South Africa) in 1910.• In 1948, Afrikaner party (Nationals or “Nats”)

won a majority and began installing Apartheid• Under Apartheid, all non-whites lost almost all

citizenship privileges and rights• This culminated in the establishment of

bantustans in the 1970s and 1980s.

Government

• Apartheid ended around 1990 and a fully democratic government was elected in 1994 and reelected in 1999 and 2004.

• Current parties:– ANC: 70% of voters (mostly, but not

exclusively African) support this party– DP: 12% of voters (mostly white, but not

exclusively) support this party– IFP: 7% of voters (mostly Zulu)

Government

• Country is organized into provinces: Western Cape, Northern, Northwest, Northern Cape, Free State, Kwa Zulu Natal, Mpumalanga, Eastern Cape, Gauteng

• ANC controls all provinces and national gov’t• National party appoints provincial leaders• Constitution is a model of democracy• Government is advised by Canadian gov’t

and tends to look a bit like Canada

Politics

• ANC is a coalition of three groups, including SACP, COSATU and ANC proper

• Government tends to be neo-liberal recently, but also interventionist

• IT is high on the agenda, but government has little money and a weak taxation system.

• ZA sees itself as a political, cultural and social leader of Africa.

• VERY free press.

Natural Resources

• CIA Fact Book: gold, chromium, antimony, coal, iron ore, manganese, nickel, phosphates, tin, uranium, gem diamonds, platinum, copper, vanadium, salt, natural gas

• SA sits atop one of the richest lodes of mineral resources in the world.

Challenges

• AIDS. Life expectancy is about 43 years; in places HIV infection rate is 20-25%. (US<1%) Population is actually shrinking by 0.5% pa (US increasing by 1% pa)

• Literacy is officially about 87%, but effective literacy rate is less than 50%. Many speak, read and write a language with limited usefulness outside ethnic areas.

Economy• Country is “organized” along economic lines.

Whites control 90% of wealth, but non-whites (90% of population) have 50% of spending power. GDP/capita is $12,000 (US=$24,000). Gini is 59* Inflation runs at about 5% annually. Currency (Rand) is about 6.55 to the USD. The poor are VERY poor.

• Industry is European in nature, with strong export orientation. UK, US are major markets. Malaysia is strong partner, owning many businesses.

• Strongest sectors are agriculture and mining

* 1995 data. This might still be an accurate figure, though

Economy• Unemployment is reported at 26% but is really

much higher, approaching 50%, mostly among Africans. Serious under-education and access problems.

• Affirmative Action (Employment Equity) laws are strong, but are not uniformly enforced

• There is evidence of overregulation and little chance for innovation.

• Electricity, gasoline are among cheapest on earth.• Main trading partners are EU, US, and Japan• Growth in GDPPC is about 4% annually.

IT

• Weak IT source sector, but IT used extensively in business• Most IT is imported and tailored• No indigenous IT design industry• ZA has 90% of African telephone lines• Telephone is monopoly. Gov’t even owns minority

interest in two of three cellular providers and 38% of the major phone company (AT&T owns 15%), which owns in turn 50% of the major cell-phone provider.

• IT and telcoms costs are very high. ALL charges are by-the-second; there are NO flat-rate charges*. All cell calls are long distance.

A flat-rate charge is R8 (about $1.25) for unlimited calling at night. But if line drops, as it frequently does, the charge to set it up again is again R8.

IT-2• English is first language to only 8% of population,

understood by maybe 30%.• No computer components are locally manufactured;

all items are ultimately imported• Current cost of a notebook PC is about R10,000 or

about $1600 for entry-level• IT is taught in most universities, but demand for

skills is very high. There is lots of emigration of skills from ZA, especially among whites and middle class blacks.

• Strongest user sector is financial services. Banks are very much up to date, but insurance firms and major businesses are moving off-shore.

IT-3

• E-commerce infrastructure is well supplied: good banking, excellent communications, good laws in place, well-developed stock market, strong private sector.

• Historically the government intervenes in everything; strong interest in IT.

• Brain drain is immense.

Communication

• At least 25,000,000 phones; most new growth is in cellular technology (approx 20 million cellphones).

• Extensive radio, television coverage; mixed public/private model (a la Canada)

• 200 ISPs • 500,000 Internet Hosts and growing• At least 4,000,000 internet users and growing• Internet in school is highly touted, but poorly

supported, as are schools in general.

Infrastructure

• First class road networks• Pipelines, rail, air are modern and available• World-class harbors, airports• IT thoroughly integrated into all aspects of

infrastructure.• Some parts of the country, like the US, are

relatively inaccessible. Urban areas are well served.

Education• Literacy rates are highest in Africa• First-class public universities, available officially to all,

but serving elites; approx. 30 universities and technikons (technical universities and colleges); national planning. Some private Univs.

• Public education in large cities is world class, exceeds private school standards in US

• University system modeled on British one• Information systems curricula are modern• Access to university is by merit with some affirmative

action policies. Among Africans, post-secondary education rates are very low.

Links and Predictions

http://www.gov.za/sa_overview/index.htmlhttp://www.southafrica.co.za/http://www.ananzi.co.za E-commerce lags the US; penetration is less than 5%

of population doing e-commerce as consumers. Businesses struggle for skills. There are many gov’t studies, but until costs come down, it is unlikely that e-commerce will benefit many entrepreneurs.

Investment Opportunities and Challenges

• Universities are not sources of IT excellence but could be• Labor costs are relatively high for third world, because

trained labor pool is highly skilled and the remainder have few skills at all.

• Brain drain means that staffing could be a problem.• IT sourcing is not going to be profitable in the short term.• Heavy usage of IT means that this is a good market for IT

goods and services. Financial services sector is one of the world’s strongest, but participation rates are low.

Specific Proposals

• Teleservices: Call centers, help desks, advice lines, homework. While labor rates are higher than the rest of Africa, the education of those who have education is very good.

• African tourism applications: An ideal place to begin African tours

Some ZA Websites

• Standard Bank

• Telkom

• One-stop Internet Shopping

• E-Commerce Advice Magazine