Deputy President Phumzile Mlambo-Ngcuka has cited the high cost of telephone calls in South Africa as the biggest challenge facing the country in its quest to become a leading global destination for business process outsourcing (BPO).

Speaking in Parliament, she described the high cost of telephone calls as a “deal breaker”.

The deputy president was delivering oral replies to questions in the National Assembly and was responding to a question posed by an MP on the BPO and tourism components of the Accelerated and Shared Growth Initiative of South Africa (Asgisa), the growth strategy that she is leading.

Key destination for Business Process Outsourcing

Outlining government’s strategy to market the country as a key destination for business process outsourcing, Ms Mlambo-Ngcuka conceded that the costs of telephony in South Africa was a key challenge when presenting its case to potential investors.

“We do have a challenge of the cost of telephone [calls]. In fact, that is the biggest challenge that we face in the implementation of this strategy – but we are working on that as well,” she said.

Government has been interacting with potential investors in the call centre market and “the issue of [the high cost of] telecoms is probably the one that will be a deal-breaker for most of them” she said.

“And that is the one[issue] that I am also very worried about – that we should try and turn around,” the deputy president said, adding that government was currently presenting its business process outsourcing and offshoring strategy to a wide range of stakeholders.

Call Centres

Expanding on developments in this sector, she said government had designated 10 areas in some of the poorer parts of the country where some of the call centres would be located, adding that “there are a number of investors that have been able to go ahead, notwithstanding that [the costs of telecommunications]”.

Government is negotiating ways to take call centres to these areas, and focusing on training members of these communities in the skills demanded by the growing business process outsourcing industry, she added.

Moving on to a wider industrial strategy within the context of the Asgisa programme which involved a degree of “cherry-picking” through enhancing existing industrial strengths and finding ways of making these work “faster and better” – another challenge facing government is that of increasing the number of “made-in-South Africa” goods being absorbed by various industries.

“In the infrastructure and construction sector in particular, we obviously are facing a challenge of having to contain the amount of inputs that we are going to be importing for our infrastructure programme because that, again, changes the bill of construction,” she said.

Government is also looking at strengthening competition policy in the country and dealing with import parity pricing as part of South Africa’s industrial strategy as well as the delivery of finance services to small enterprises, being reflected by the current consolidation taking place around micro-financing.

Another element of government’s industrial strategy, the deputy president said, was a study currently under way to review industrial institutions such as the Industrial Development Corporation (IDC) and Khula  Enterprise Finance Limited, an agency of the Department of Trade and Industry (the dti) designed to facilitate access to credit for Small, Medium and Micro-sized Enterprises (SMMEs).

“In that strategy we address also [the] regional and African-industrial trade framework, again so that we can enhance the amount of trade that we do with Africa as well as an integrated, co-ordinated industrial development within the region, with the continent.” she said.