Working Paper
Prospects for the Digital Economy in South Africa

This study explores the on-going development of a global digital economy through a case-study analysis of its impact on and prospects in South Africa. It argues that four factors are key to understanding the impact of the digital economy on a developing country: (i) the level of technology, including its information and communications infrastructure and system of production and distribution; (ii) the policy and regulatory framework and initiatives; (iii) the human capacity and income distribution; and (iv) the strategic approach of the state in response to dramatic global and domestic processes. The paper explores these four factors in the Republic of South Africa, with a focus on the period 1995-2000. Data for the study are drawn from survey research, published reports from national and international bodies, scholarly journals, structured interviews, and participant observation. Key findings of the study are as follows: an insufficient information and communications infrastructure remains a barrier to growth of the information economy in South Africa, especially in peri-urban and rural areas; awareness of the importance of the information economy is growing, but current human resources and development strategies are insufficient to meet human capital requirements; significant efforts have been made in order to re-orient the South African policy environment into one supportive of growth in a global digital economy; and South Africa’s role as a leading African and developing world economy places additional burdens on its need to engage in regional, and global policy formulation activities in support of the emergence of a new regime for global e-commerce that is supportive of the strategic goals of the developing world.