The AI revolution: Are South Africa and emerging economies falling behind?

A recently-released IMF report on artificial intelligence and its impact on economies around the world has revealed that low-income nations as well as some emerging markets like South Africa risk being sidelined or left behind as the powerful technology reshapes the global economy, trade and how people live and work.

The report titled “The Global Impact of AI: Mind the Gap” warns that “some EMs (emerging markets) and most LICs (low-income countries) may struggle to keep pace” as the advanced economies of the world integrate AI and “harness it more effectively”, potentially boosting economic growth in the near future.

“In contrast, some EMs and most LICs may struggle to keep pace, exacerbating existing income disparities and widening the income gap between countries,” the report warns.

It states that AI “preparedness” also plays a pivotal role.

“Factors such as strong institutions, a sophisticated digital infrastructure, and a skilled workforce can significantly influence how effectively AI is adopted and integrated. Even when highly exposed to AI in principle, countries lacking strong foundations may struggle to realize meaningful productivity gains, underscoring how institutional and policy readiness can determine whether AI supports sustained growth or exacerbates existing inequalities,” the report states in its introduction.

The report is part of IMF’s “working papers” released to elicit comment and debate on in-progress research the organisation is involved in.

Although South Africa is not mentioned explicitly, some local commentators on this subject have expressed doubts about the country’s preparedness or ability to keep abreast.

Paul Colmer, an executive committee member of the Wireless Access Providers' Association (WAPA), highlighted two major hurdles standing in the way of South Africa and the region’s development and integration of AI technology – power and water issues.

He said the scarcity of the two resources were “highly restrictive” of the region’s ability to scale up the construction of AI-enabled data centres of the size currently being built in countries like the USA and the United Arab Emirates.

“South Africa’s AI capability – or even Africa – (in terms of AI-ready data centres) is only one percent of the global market, which is tiny,” said Colmer.

“The big ones under construction is Stargate UAE, which is starting at 1Gigawatt moving to 5gigawatt, and the other one is what they’re building in Memphis, which is gonna run the Grok AI and Grokipedia. Its initial capacity is a gigawatt but it will grow to maybe 5. So, that’s Elon Musk’s big-play,” explained Colmer.

'SA not going to scale'

Stargate UAE is a 1-gigawatt computer cluster project being built in Abu Dhabi by UAE firm G42, OpenAI, Oracle, Nvidia, and Cisco and expected to be completed next year. It will provide a major hub for AI development and processing power for the region. Elon Musk’s xAI is building a data centre of similar size in an old appliance factory in Memphis, Tennessee, to house its Colossus supercomputer.

“What we see being built now is single data centres with more capacity than all the data centres in Africa put together on a global scale… So, it’s very, very difficult in South Africa to build the big AI data centre because of the power and water issue,” said Colmer.

“One thing for sure, globally they’re moving full-scale ahead. Africa, South Africa, not really a major player at one percent. And the problems that I’ve just mentioned with power and water, it’s gonna be highly restrictive … There’s no way that Eskom grid can support data centre growth in South Africa. No way.”

Putting things in scale, Colmer said: “If we built something the size of Colossus 2 or Stargate UAE in South Africa we’d have to dedicate three nuclear power stations the size of Koeberg to run it.”    

“So, South Africa is not going to scale on AI data centres - until such time as they resolve the power and water issue.”

Asked about potential opportunities arising from South Africa’s G20 presidency, Colmer said the conference was an opportunity for “collaborative investment” based on alternative energy technologies like solar power.

“As I’ve said before, AI is at the forefront of technology, and technology moves at a rapid pace – an amazing pace. And if it takes South Africa 17 years to build a power station, where the hell is AI gonna be in 17 years? Noone even knows.”

While positioning and readiness do not look very positive for South Africa, at least the government seems to be alive to the opportunities AI and emerging technologies hold. Communications and Digital Technology Minister Solly Malatsi stated as much at a recent gathering.

“Artificial Intelligence holds immense promise to improve productivity, deliver better public services and address complex development challenges. It must, however, be guided by clear principles and sound governance.

“Under our Presidency (of G20), we reaffirmed that AI must be safe, transparent and aligned with human rights. It must serve people, not replace them. It must reflect shared values of equity, accountability and trust.”