1,000% increase in broadband speeds and more investment on the way

South African businesses are enjoying a tenfold increase in broadband speeds, proving that the country isn’t “10 years behind” the advanced western world in all areas of infrastructure.

The operation since 2009 of an undersea cable along the east coast of Africa has vastly improved broadband speeds and reduced prices in numerous African countries. With the internet increasingly pivotal to commerce, the installation of the Seacom cable is a seismic development that will make any website for sale in South Africa more alluring propositions to investors.

Carl Liebenberg, CEO of Arcay Capital Partners in Cape Town, is well aware of his country’s perceived technological lassitude. “We’re still about 10 years behind” the advanced nations in terms of infrastructure generally, he admits, but remarks that the cable “has had a fairly significant impact, both in terms of capacity and in pricing. Our pricing has come down dramatically in the last 12 months.”

The South African technology sector is rarely considered on par with its American and European counterparts. With France and Finland calling internet access a ‘basic human right’, the South African government is striving to bridge the gap.

There’s a perception among many people that the South African government haven’t been running the economy very well, but one area they have been really good is in fiscal management. The balance sheets are in their best state for 50 years

Carl Liebenberg, CEO, Arcay Capital Partners

“There’s a very big drive right now in South Africa to invest in infrastructure,” says Liebenberg. “They spent a lot of money in the run up to the World Cup. There is quite a big allocation every year in our budget to spend on roads and other infrastructure.”

If it seems surprising that South Africa can afford such largesse in the age of austerity it’s because the country isn’t actually unburdened by the debt mountain crippling the Eurozone and US: “It’s actually quite ironic. There’s a perception among many people that the South African government haven’t been running the economy very well, but one area they have been really good is in fiscal management. The balance sheets are in their best state for 50 years.”

Liebenberg believes that exchange controls instituted by the government, together with its ability to run “a very tight ship”, mean that “we haven’t been able to take money willy-nilly offshore. Our borrowing is somewhere around 10-12% of GDP” – a figure even those paragons of thrift, Germany, can only dream of.

South African growth rates have, however, dropped substantially with a second global slowdown occurring. Nevertheless, the 4.5% and 1.3% increases posted in the first and second quarters are still somewhat healthier than the equivalent figures for their EU counterparts, which are hovering barely above zero.