Comments on the Telecommunications Proposals in the National Treasury Economic Strategy Paper

Mark Williams and Phil Alves

September 14, 2019

South Africa’s National Treasury published a draft economic policy paper in August that sparked debate over the country’s economic reform agenda. President Cyril Ramaphosa endorsed the paper in mid-October during an interview with The Economist magazine. A final version is expected around the same time as South Africa’s mid-term budget, at the end of October.

Titled Economic transformation, inclusive growth, and competitiveness: Towards an Economic Strategy for South Africa, the policy paper calls for structural reforms across network industries, including telecommunications, which provide strategically important inputs across the whole economy. Most of the proposals focus on strengthening competition as a means of improving performance and service delivery.

Mark Williams and Phil Alves have worked on telecommunications policy and regulation in South Africa for many years. At the urging of a client, they responded to the National Treasury’s request for comments. Their submission focused on providing an industry context to the problems and reforms identified in the policy paper. For some of the proposed reforms, they also provided insight into relevant international experience.

The submission broadly concurs with the National Treasury’s view that competition in South Africa’s telecommunications sector is the primary driver of investment and improved performance. It also expresses agreement that competition could be strengthened in some areas. The question is how best to do so while promoting universal access to broadband at affordable prices.

Mr. Williams’ and Mr. Alves’ analysis suggests that most reform effort should focus on mobile. Mobile is the only feasible means of widening access to broadband in South Africa—as it is in most other emerging markets. Recent innovations in mobile technology mean that these networks are also capable of meeting future demand for capacity and speed.

Preparation of the report was funded by Telkom SA SOC.

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Phil Alves

Associate Director