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THOUGHT LEADERSHIP
By 19 December 2018 | Categories: Thought Leadership

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By Andries Brink, CEO, Andile Solutions

Over the past 50 years, three wise men made predictions that have become definitive in our time. Gordon Moore said data processing would double in capacity every 18 to 24 months, Mark Kryder predicted that data storage would expand at about the same rate, and George Gilder said the bandwidth connecting different nodes would double at three times that speed. Like the sages from the biblical story, they saw a massive star rising ahead of them.

Today we stand in the radiance of technology’s sun. My consumer grade phone is more powerful than most corporate data centres at the turn of the century. It has 200 000 times more memory than Voyager 2, which just left our solar system. In lockstep with this progress, today’s data centres produce decentralised processing power at incredibly cheap prices. These have found their way to humanity and are delivering on the promise of a new dispensation. Maybe LOCNVL had a point when they sang in 2010 that they had a sun in their pocket.

Let’s change our focus, for a moment, to Africa, which despite having nearly a billion people still only produces roughly $3.5 trillion in GDP. Apple, Alphabet, Amazon, Microsoft and Facebook have a collective market capitalisation of the same amount, yet do so with 0.08% of the number of people. To say Africa is missing out on the technology sun is an understatement. While everyone can benefit from this change, only a few will be positioned to lead it. It’s a fact quite visible wherever you look.

Over the centuries, we have learnt that only four composers (Bach, Beethoven, Mozart and Tchaikovsky) wrote almost all the music played by modern orchestras. Similarly, just a handful of authors sell all the books (of 1,5 million books published each year, only 500 sell more than a hundred thousand copies), and of the few scientists that actually publish papers that are accepted, only a very small percentage are then actually referenced by their peers. Business majors will note that this phenomenon was captured eloquently by 18th century Italian polymath Vilfredo Pareto and his 80/20 principle.

The question we should ask ourselves is: how can SA be part of the 20%, the mavericks that change the world instead of the 80% who end up as followers? For the answer, we need not look further than Lesetja Kganyago, the governor of our Reserve Bank:

“Lasting wealth… isn’t in a country’s soil but in its citizens’ heads. Countries get rich because people develop specialised skills, and because they find ways to cooperate so they can do things much too complex for any individual to do alone. To handle all this complexity and specialisation, people gather in firms, and firms interact in markets.”

He warned that when a state declares war against market mechanisms and wealth, it kills off investment and scares skilled people away. Natural resources don’t get used effectively, no matter how abundant they are, and the economy doesn’t develop other kinds of industries either.

It’s not hard to back this view: the mess in the DRC, the collapse of Zimbabwe, and the unbelievable accumulation of debt by Zambia reveal how disdain for market principles have hobbled what should be highly productive nations. Neither is it hard to find positive examples: India and Singapore have transformed their economies thanks to very business-friendly environments, and they have reduced poverty as well. The rise of the Asian Tigers had a lot to do with using market mechanisms effectively.

This brings us to the saviour part.

Minister Rob Davies recently declared that “there would be serious winners and losers due to the 4th industrial revolution (4IR).”, sounding vaguely familiar to a disturbing passages from the Holy Bible, a book that we can be certain the Minister did not mean to reference. In Matthew 13:12, Jesus says that:” For whoever has, to him more will be given, and he will have abundance; but whoever does not have, even what he has will be taken away from him.” (The reader should be aware that economists often refer to the Pareto principle as the Matthew principle in relation to the above)

A significant number of things have been taken away from South Africa during the Zupta era. Yet South Africa still has an incredible opportunity here:

Yes, since 2008 SA has plunged 22 spots from 45th position. Yet we are still in the game and can reverse the trend, particularly if we harness 4IR beyond mentions in speeches. To me the opportunity is obvious. We have the finance system, market size and innovation capability to create a hotbed for 4IR-fueled progress. Looking at my industry, we should find ways to bring the smartest fintechs to South Africa.

Therefore, during this festive season, let us listen to our favourite devices streaming Mozart and Beethoven whilst we study and embrace the wise words of Pareto and other trusted saviours. The governor has confirmed our course. If SA Inc. could open doors for that 0.08 % of innovators and give them a reason to bring their wealth and knowledge here, we can accomplish amazing things as a nation. The three wise men have shown us a great rising star that everyone, even our most Marxist ministers, can see on the horizon. In 2019, let’s hope, and pray, we can converge on the opportunity.

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