As most global markets experience growth, South Africa remains in an economic quagmire.
Due to credit rating downgrades, a volatile currency, and lower contributions to GDP from the country’s major economic spinners – the agriculture, manufacturing, and mining sectors – the country is experiencing stubbornly high unemployment and anaemic economic growth.
Low skills levels and declining productivity are also eroding the country’s global competitiveness.
While the panacea to these challenges is multifaceted, and requires both public and private sector participation, the appropriate application of modern technologies can be an important part of solving many of these challenges, states a new whitepaper released by Accenture.
Potential to double SA’s growth
Thanks to unlimited access to computational power through cloud computing, and growth in big data, new digital technologies like artificial intelligence (AI) are already reshaping the world.
Similarly, AI can help South Africa solve many of its challenges in entirely new ways, and across multiple industries. More significantly, the application of AI technology has the potential to double annual growth rates.
South African organisations can no longer depend on increases in capital and labour alone to drive economic growth. They need to also embrace and accelerate their adoption of AI to improve operational efficiencies and margins.
In South Africa, AI already exists to some degree in many industries, but digital adoption on the whole remains slow. The imperative to transform is, however, urgent if businesses wish to maintain their competitiveness in global digital markets and ensure their sustainability.
Slow rate of adoption
The whitepaper attributes this slow rate of adoption to the fact that many local organisations are currently struggling with legacy technologies, systems, business models and corporate structures, large core workforces and sunk investments in owned infrastructure.
Others are just starting their digital journeys, and are coming to terms with the new business models, processes and skills needed to leverage the opportunities in an increasingly digitalised world.
To these organisations, AI may seem a long way off, but it is not. Organisations that leverage AI technologies now and make them a key component of their digital business environment will weave a place for themselves in a new digital society.
AI is able to learn faster than humans, if not yet as deeply.
Unlike conventional assets such as buildings and machinery, AI in its physical forms, such as robots or intelligent machines, can improve over time, thanks to AI’s self-learning capabilities.
Research presented in the paper shows that businesses that operate in the manufacturing, agriculture, and wholesale and retail and accommodation and food services sectors are poised to benefit most by embedding AI.
According to the research findings, the impact of AI on these industries could boost annual gross value added (GVA) growth rates by 1.4, 1.2 and 1.1 percentage points respectively, by 2035.
However, to successfully pursue an AI agenda in South Africa, policy makers and business leaders must prepare for, and work toward, an AI-enabled future. They must understand that AI is not simply another productivity enhancer. Rather, it is a new and discrete factor of production, and a tool that can transform our thinking about how to create growth.
This can be achieved in three distinct ways:
- By creating a new virtual workforce that complements and enhances the skills and ability of existing workers and physical capital, in what Accenture calls ‘intelligent automation’.
- By augmenting labour and capital to boost productivity through enhanced efficiencies and effectiveness.
- Through AI’s ability to stimulate innovation as it diffuses through the economy.
Accenture believes that AI should be applied in a capital-labour hybrid model, where it is able to replicate work activities at greater scale and speed, often well beyond human capabilities. The ability of AI to complement and enhance traditional factors of production is where its true potential lies.
While the payoffs of an AI-enabled future could be significant, policy makers and business leaders are cautioned against underestimating the challenges that lie ahead in integrating AI into the economic, social and business systems of our country.
To fully exploit AI’s potential for South Africa, policymakers must be thoroughly prepared to address the intellectual, technological, political, ethical and social challenges that will inevitably arise as AI becomes more embedded in our lives.
Key to this will be successfully integrating human intelligence with machine intelligence, so that they coexist in a two-way learning relationship.
As the division of labour between man and machine changes, policy makers need to re-evaluate the type of knowledge and skills imparted to future generations.
This will require, among other considerations highlighted in the whitepaper, the AI-enabled identification of talent, the re-skilling and up-skilling of the workforce, the creation of a code of ethics for AI, and a new strategic approach and mindset to the application of these technologies.
Ultimately, the opportunity that AI presents for South Africa transcends improved efficiencies.
It is an opportunity to close gaps and radically improve the productivity of people and assets, spur innovation and increase competitiveness across sectors.
However, to realise this potential the time to move forward is now.