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Banking veteran Michael Jordaan says a new data-only mobile network could boost South Africa’s Gross Domestic Product (GDP) by R64bn.
READ: New 'super-fast' LTE network for SA
Jordaan, a former FNB CEO, is one of the backers of Wireless Business Solutions (WBS) which on Monday announced a multi-billion rand investment in a new national ‘high-speed LTE-A’ network in South Africa.
The new wireless network promises to be an alternative to fibre networks.
The WBS network is expected to be rolled out in the next few months, and is further set to enable 5G technology and make South Africa “leaders in the field”.
But the new network is also expected to have an impact on South Africa’s economy and below is Jordaan’s take on how this could happen.
The below comment first appeared in a blog post on the website of Montegray Capital, which is Jordaan’s venture capital firm. Jordaan’s comments in the blog post have been used with his permission below:
Ok I get it. Investing many billions of rands in a 4.5G data network requires some explanation, especially around the benefits to our struggling SA economy.
The best way to answer it is by doing some sums. It won’t be difficult, I promise.
Let’s start with the basics. The World Bank says that for every 10% increase in the amount of people connected to the internet, the economy grows by 1.4%.
Adding a new national, mobile data network to the four existing ones (Vodacom, MTN, Cell-C and Telkom) increases the potential of the SA mobile Internet by 25% (or one over 4).
As background, less than 5% of SA has a fixed broadband connection but for mobile data the figure is just over 50% of the population. So mobile is by far the most popular way to access high-speed internet.
If we are conservative and say that this new network will result only in a total increase of 10% (and not 25%) in the number of South Africans that will get broadband access, we should be safe. And it makes the sums even easier because we already know that a 10% increase in broadband access translates into a 1.4% GDP uplift.
Last year our GDP was R 4 545 billion. (Yes I know the figures fit neatly with 4,5G but that is just coincidence). So 1.4% of R4 545 billion is R64 billion. In other words, investing in a new mobile data network lifts our GDP by a massive R64 billion (or 8 times). Now that figures.
