South African interest in the 4IR and emerging technologies, 2020-2021

by Johannes Sekgololo, Nomzamo Gondwe, and Bhaso Ndzendze

A global technology trend is emerging in South Africa, driven by the integration of biological, physical, and digital assets in an alternative technology-based dynamic. The reduction of costs, improvement of models and increasing profitability are all now premised on 4IR technologies. While policymakers worry about rising unemployment, their business partners are fixated on the 4IR to automate work, exacerbating the unemployment crisis. But ultimately, citizens of any country will drive its 4IR trajectory. They must either use the ubiquitous 4IR technologies to emancipate themselves or confront the government with protests, strikes or lootings as unemployment increases exponentially. Essentially, the success of the 4IR depends on how exciting and valuable 4IR is perceived to be by citizens for their futures. Notably, it will take some time before South Africans can enjoy the fruits of innovation-led prosperity. Therefore, prioritising advanced development of skills to this so-called disruptive effect of technology is crucial to recognising their interests.  As one of many methods, Google searches can determine citizens’ interest in new 4IR technologies. In order to determine which 4IR technologies South Africans find attractive, we isolate (as a bottom-up process) artificial intelligence (AI), machine learning (ML), big data (BD) and cryptocurrencies. The searches are between February 2020 and November 2021.

AI, which seeks to mimic human intelligence, traits and skills through instructions embedded in computers (thereby replicating natural language processing, machine vision and speech recognition), is becoming an indispensable part of our lives. Nearly, two thirds of South Africans have become privy to these aspects of AI. For example, it is customary to find iPhone users conversating with Siri. Elon Musk’s Tesla is producing autonomous self-driving cars reducing the necessity of human involvement. In terms of searches on AI in South Africa, we note Free State as having the largest share of searches (at 33%), followed by Mpumalanga (26%), KwaZulu-Natal (25%), and North West (23%). Other provinces are at 19% or less.  

ML is a sub-category of AI demonstrating analytical skills, interpreting, identifying patterns in humongous data sets, and carrying out operations with little or no human help. Five out of 9 provinces in South Africa showed interest in ML on this score, with Gauteng leading and the remaining 4 registering zero percent searches in comparison. The five are Eastern Cape (12%); Gauteng (20%); Limpopo (17%); KwaZulu-Natal (10%); and Western Cape (19%). The provinces of Mpumalanga, North West, Eastern Cape and Free State showed no interest during the reporting period towards ML. 

Big Data is a form of 4IR technology that seeks to analyze voluminous amounts of data schemes (where traditional software fails) that are structured, unstructured or semi-structured, such as information from stock exchange trades or social media posts on websites such as Twitter. On this score, Free State (at 15%) led. The other provinces observed the following: Eastern Cape registered (11%); Gauteng (14%); KwaZulu-Natal (11%); Limpopo (9%); Mpumalanga (14%); North West (6%); Northern Cape (0%); and Western Cape (12%). 

Cryptocurrency is an example of blockchain, which represents a 4IR technology enabling, among others, online payment through digital signatures via the decentralised ledger without the involvement of financial institutions or central banks. As the Bitcoin’s pseudonymous founder (named Satoshi Nakamoto) puts it: “What is needed is an electronic payment system based on cryptographic proof instead of trust, allowing any two willing parties to transact directly with each other without the need for a trusted third party.” Ultimately, cryptocurrency exists to intensify financial interaction between citizens of the world without governments’ red tape. Thus, anyone with a smartphone, internet and money to invest can join the cryptocurrency revolution; there is no need for a bank account. The technology is an example of what is called a GPT (general purpose technology). This means it can be applied in a variety of uses, including, as has been the case in Kenya, securing elections and, as has been the case with NFTs (non-fungible tokens), safeguarding assets. In October 2021, Bitcoin prices reached their historic zenith of $61 374.28 per coin compared to $193.02 in 2013. In South Africa, in comparison to other 4IR technologies, cryptocurrency was searched most frequently, followed by the other provinces: Free State (52%); Gauteng (47%); KwaZulu-Natal (54%); Limpopo (54%); Mpumalanga (60%); North West (71%); Northern Cape (100%); and Western Cape (57%). 

Source: 4DPRU. Data sourced from Google Trends (2022).

The above figure shows that cryptocurrency is mainly what South Africans find interesting out of all 4IR technologies. The Northern Cape remained comatose on AI, ML and BD but the Northern Capetonians came back to outdo all other provinces with 100% searches focused solely on cryptocurrency. AI, ML and BD ordinarily have industry scale and utility as they tend to improve business profitability and related prediction models. The government’s uses of AI, ML and BD can have a humanitarian aspect, i. e., service delivery tied to water, transportation and hospitality and efficiency in tax collection. Cryptocurrency’s utility is usually grabbed by citizens who exhibit an appetite for risk and reward. These citizens regard cryptocurrency as a vehicle for economic emancipation amidst the failing economic conditions in South Africa characterized by a high unemployment rate.

One of the biggest challenges and inhibitors of technology adoption in South Africa remains cybersecurity, with losses estimated at R2.2 billion in 2021 alone. Additionally, in August 2021, reports of the most significant international crypto heist at $600 million were stolen through the Poly Network’s exploitation connecting various blockchain networks. Although the heist took place elsewhere, this only demonstrates the level of cybercrimes faced by investors in cryptocurrencies. Thus, the South African state must secure cyberspace to support 4IR technologies, especially the high interest in cryptocurrency shown by citizens. The second inhibitor is the sloth paced finalization of the regulatory framework on cryptocurrency by the South African government (SAG). Since 2013, there has been no proper regulation of the cryptocurrency environment, leaving citizens to participate in crypto deluge without the support and directive of financial authorities. The lack of regulation has continued despite clear evidence of the use of cryptocurrency to facilitate money laundering, drug trafficking amongst other ills. To remedy this, the SAG must expeditiously finalize the regulatory framework on cryptocurrency to protect citizens against risky assets from a deregulated cryptocurrency. The regulation of the cryptocurrency will further allow the SAG to develop skills and competencies to track and trace abuses of cryptocurrencies for nefarious purposes. We note, on this point, the FBI’s successful exploit of the bitcoin wallet used by cybercriminals who hacked the Colonial Pipeline in 2021 for ransomware, and got paid in Bitcoins. 

What are our conclusions? Firstly, the main drivers of 4IR in South Africa are citizens rather than the elites as is often assumed, most recently in a widely circulated opinion article by Ian Moll. Moreover, it can be noted with regards to  AI that it is not a lack of technical skills that contribute to slowing its slowing progress, but rather a greater need for a culture of experimentation. Blockchain, excessively represented by their cryptocurrency incarnation, are more popular than other 4IR components, including AI, ML, and BD. Secondly, the higher interest in cryptocurrency in a society marked by higher-than-average unemployment and social inequities likely means that citizens’ appetite for risk in the pursuit of self-enrichment is becoming virtually boundless. Thirdly, the government should align policy and legislation with the interests of citizens regarding cryptocurrency and finalize the regulatory framework so that citizens will not face risk and criminality due to legal ambiguity. Finally, South Africans are willing to embrace 4IR technologies if there is a demonstrable net benefit.