NETWORKED ECONOMY (Stage 2):

South Africa has a well-developed infrastructure, communications and banking systems and has the largest and most advanced ICT industry in Africa. South Africa is a middle-income emerging market country. The country has been identified by the U.S. Department of Commerce as one of ten “Big Emerging Markets” that will get the attention of American trade and development [5.5]. Lagging infrastructure and poor business environments inhibit African markets but South Africa has grasped a niche and developed a competitive advantage in business service processing. Internet options are still at an all time low, the country has weak infrastructure development and high costs. This keeps connectivity rates for voices services and Internet services down. The ICT market is growing again after a drop-off in spending from 2000 to 2001, according to new data released today by the World Information Technology and Services Alliance (WITSA). According to WITSA’s biennial study, Digital Planet: the Global Information Economy, ICT spending is expected to grow approximately 8% a year from 2003 through 2007, ultimately reaching $3.2 trillion (USD). Rapid growth in emerging markets is the primary reason for the turnaround. ICT spending growth in South Africa is expected to exceed the global pace, growing from $12.9 to $18.4 billion, or a compound annual growth rate of 9.3 percent.

ICT Employment Opportunities (Stage 2)
Poor economic times and good opportunities overseas have lead to the loss of many skilled IT professionals. There is a shortage of qualified IT personnel necessary to support e-commerce across the continent. This in turn resulted in a major negative impact on the development of e-commerce in South Africa. However, since the democratic elections of 1994, South Africa has once again thrived and become a desired international trading partner. Most of the major IT corporations are represented in the country, including high profile companies such as Microsoft, JD Edwards, Oracle, Bay Networks, Motorola, Cisco, Compaq, Netelligent, Digital, Novell, Lucent, Lotus, Lawson’s and Intel. South African businesses, particularly large companies are generally leading adopters of technology, and lag only slightly behind developed countries. More than 20% of medium and large companies claimed to be deriving at least some of their business via electronic networks. A similar proportion claimed to be purchasing via some form of network. Further, e-Commerce is now the leading new investment area in the Top 200 IT companies in South Africa [5.5]. Capetown is becoming popular site for international companies to set up shop. The city has a well-established IT infrastructure and an abundance of language-proficient skilled workers. It also offers favorable exchange rates for foreigners, cheaper flights and has a similar time zone to Europe. Companies are using the city as a test ground for products and services destined for the global market.

Business-to-Consumer (B2C) Electronic Commerce (Stage 2)
South African consumers are adopting e-Commerce at a high rate. Consumers are most likely to buy books, theater tickets, airline tickets, software and computer equipment online. South Africa has major problems to overcome [5.3]:
? Lack of consumer confidence
? Expensive Internet access
? Commerce traditionally conducted on more personal lines
? Addresses don’t follow US standards
? Credit cards are not widely used
? English won’t serve
o Some of the site must be in the national languages
? Fraud is at extremely high levels (up to 80%) - Shoppers are concerned that hackers will intercept and misuse their credit-card details. For this reason computer security is now a huge industry and is growing in tandem with the prosperous e-Commerce activity

South Africa has the readiness to embrace new technologies but there is a need for deregulation and cyber law legislation. Despite the lack of consumer confidence the 2000 holiday season in South Africa had online sales reached R20 million. This stills tremendously lags behind the US $10.7 billion during the same period. Another hindrance in developing e-commerce is the fact that many South Africans do not have regular access to the Internet. President Thabo Mbeki signed into law on July 31, 2002 the Electronic Communications and Transaction (ECT) Act. The purpose of the Act is:

To provide for the facilitation of and regulation of electronic communications and transactions; to provide for the for the development of a national e-strategy for the Republic; to promote universal access to electronic communications and transactions and the use of electronic transactions by SMMEs; to provide for human resource development in electronic transactions; to prevent abuse of information systems; to encourage the use of e-government services; and to provide for matters connected therewith.

A survey done in 2002 showed that most local e-commerce websites were not ready to comply with the ECT Act [5.2]. There are a number of opportunities existing for U.S. companies to participate in the South African e-Commerce arena. The market is open for new players. However, joint-venture arrangements with locally based companies seem to be more financially viable than stand-alone market penetration.

Business-to-Business (B2B) Electronic Commerce (Stage2)
B2B is growing at a faster pace than B2C. This is largely due to companies moving existing client relationships from a physical to online transaction channel, with the ultimate goal of cutting costs and streamlining procurement processes. South African companies feel confident that a strong B2B marketplace will be a driver towards greater Internet adoption in the country [5.1]. B2B e-commerce represents an opportunity not only to connect with global markets but also to catch up and remain at the frontier of ''world class'' competitiveness. B2B is largely limited to straightforward commercial transactions rather than more advanced forms of supply-chain collaboration. Sectors that are showing extreme promise are the apparel and manufacturing sectors. B2B e-commerce is booming internationally resulting in local licensing of major international providers such as CommerceOne, Ariba, i2 Technologies and Oracle. Many more B2B have set up operations with the support of established South African corporations as investors.

E-Government (Stage 3)
South Africa is making progress on the road to e-government. The biggest key challenge government faces is in the lack of education and training of citizens, including civil servants, both in the use of ICT and in the culture of e-government. South Africa's e-government strategy is led by the CPSI in partnership with the Department of Public Service and Administration and the State Information Technology Agency. The government has implemented a website at www.gov.za ; this web site provides the user with two paths [5.4]:

The information portal - www.info.gov.za - carries comprehensive, updating information on government contacts, departments, events and projects, as well the latest government speeches, statements, notices, tenders and consultative documents. National, provincial and local government links are easily accessible, along with information on the country and frequently asked questions on issues ranging from business to travel and tourism. The services portal - www.services.gov.za - breaks down into services for individuals, services for organizations, and services for citizens from other countries.

The gateway project will be extended to South Africans living in poorer or more remote areas via public information terminals in post offices and the government's expanding network of multi-purpose community centers (MPCCs) countrywide. Other channels for government services will include ATMs and Uthingo outlets, and public servants will be trained to help people access these channels. During the first phase of the gateway, citizens will be assisted by specially trained community development workers at 9 selected MPCCs and 55 postal facilities. Forty community development workers have so far been trained to carry out the program in Gauteng. In its next phase, the e-government gateway will move from offering information on services - what services there are, who qualifies for them, where and how to access them - to enabling users to make online transactions.

Two provinces are ahead of the rest that provide provincial information regarding e-government, Guateng and the Western Cape. The advantage of these provinces is their developed communication infrastructure due to their being the economic hubs of their regions and because people in these areas are generally more comfortable using the Internet to conduct business. Since vital personal information will be collected through the governmental website, security will play a major part in the success of e-government websites. Internet fraud is extremely high in South Africa and the public is already weary of making personal and business transactions over the web. The government will have to work extra hard at maintaining the public’s trust and protecting them from fraudulent acts from hackers on the inside and outside of government.