Managing Director & Partner
Generative Artificial Intelligence (Generative AI), though still in its early stages, is maturing fast and looks set to become one of most important technologies of our time. It has already attracted strong interest, and substantial investment. The launch of ChatGPT last year, with its underlying language-model AI technology, brought to public attention the power of Generative AI technology. New use cases of Generative AI are emerging daily.
Generative AI can leverage very large amounts of propriety data and then support data-led decision-making. The commercial applications of these capabilities are very promising, and are being pursued apace. This report, however, concentrates on the societal implications; it looks at the ways in which Generative AI, together with AI more broadly, can address some of South Africa’s most pressing challenges, and discusses how Generative AI can be responsibly harnessed to transform the lives of South African citizens.
This report explores four key areas where Generative AI could play a transformative role:
The aim is to examine some of the possibilities in each of these areas through various use cases, and also to discuss the risks associated with AI and the ideal environment for realizing AI’s potential benefits. But first, we should define Generative AI—especially in relation to AI in general—and sketch the current state of play.
AI is the field of computer science that aims to create machines or systems that are able to perform tasks that normally require human intelligence—tasks involving reasoning, learning, decision-making, or creativity. AI has evolved over the decades from rule-based systems and expert systems to machine learning and deep learning, which can identify patterns and gain insights from data—and can improve over time.
As for Generative AI, it is best known through its manifestations such as ChatGPT (text-based AI) and DALL-E (text-to-image AI), but it goes well beyond these applications. Generative AI is a subset of machine-learning techniques and models that can produce original text, images, and audio (see Exhibit 1).
Over the past few years, the barriers to using AI have begun to fall, as the necessary tools and platforms have increasingly become accessible to ordinary citizens. In this fine new world, there is no longer the need for vast datasets or powerful computers, since much of what’s necessary is now available through cloud providers. There is also no need for sophisticated technical knowledge: certainly tech-savvy users can download the code and train and refine the models if they want
Estimates are that Generative AI will have a market value of $60 billion by 2025 and account for 30% of the total addressable market for AI in general (see Exhibit 2).
Over the past three years, Generative AI start-ups have attracted soaring levels of investment, receiving $20 billion in funding—five times more than the total investments secured in the previous three years (see Exhibit 3).
The recent launch of various easy-to-use chatbots has led to a rapid and widespread public adoption of Generative AI, with consumers captivated by its ability to create realistic and immersive content (see Exhibit 4 below).
Generative AI can create data-driven, customized, and specific content that is accessible by millions, and as this report shows, it has the potential to address many of South Africa’s societal challenges.
(Note that some of the use cases outlined below are traditional AI use cases that are enhanced when Generative AI is applied to them—see Exhibit 5. Accordingly, the broader term “AI ” is used from now on, rather than “Generative AI.”)
AI is no silver bullet, but it certainly can make a transformative contribution to easing societal difficulties, notably in four key areas: Healthcare, Education, Financial Inclusion, and Agriculture.
The healthcare system in South Africa faces several challenges. Both public and private sectors are involved in healthcare provision, with ~70% public and ~30%
Education in South Africa is characterized by severe disparities between private and public schools. Public schooling in general suffers from teacher shortages and underfunding (especially in rural areas). And among public schools themselves, there are marked differences according to their location, students’ backgrounds, class sizes, and the like. Teachers often lack appropriate resources, including internet access; and many students face hunger and a lack of parental support.
A recent report, based on a survey of 320 schools in South Africa, finds that 81% of grade 4 learners (typically ages 9-11) are still unable to read for
If access to the internet and computers and the digitization of materials were improved appropriately, AI could contribute to several positive shifts in the education sector:
Recent efforts to expand financial inclusion in South Africa have met with some success, but far more remains to be done to improve people’s financial literacy, money management, and access to economic opportunities. Currently, ~20% of adults lack even a basic bank account (or ~30% if you exclude social-grant
Many other factors complicate the banking landscape in South Africa, including the following:
Although these problems will not be easily or quickly resolved, AI can offer some assistance to foster financial inclusion, including the following:
AI can make financial services more accessible to customers. By deploying AI-powered chatbots to handle routine client queries and provide timely responses, banks will be able to:
South Africa has a rich farming history. Agricultural production plays a pivotal role in the country’s economy, contributing ~2.5% to
There are several ways in which AI can engage with these industry challenges, including the following:
AI can analyze data to help farmers optimize the efficiency and sustainability of their farming practices. Farmers can use sensors, drones, and satellites to gather real-time data on their crops, including details on soil health, water usage, crop growth, and the presence of pests. This data can then be analyzed by AI algorithms, with the results guiding farmers on how best to use resources and maximize crop yields. Farmers will be able to:
While AI opens up a new class of opportunities, it also introduces a new class of risks. Many of the risks implicit in AI have been widely publicized, and some of them will prove difficult to mitigate let alone eradicate. Moreover, given that AI is still maturing, some new and unforeseen risks will emerge. Constant vigilance and evaluation of risks are therefore crucial as the technology progresses. (A comprehensive exploration of the risks is beyond the scope of this report.)
For AI to achieve scalable and affordable adoption in South Africa, and to realize its full potential, several indispensable elements will need to be in place.
Appropriate laws and regulation. AI development should take place within an appropriate legal and regulatory framework, to define standards, priorities, and ethical boundaries, and also to support the growth of AI adoption and mitigate AI risks. A technical working group of experts from relevant industries, including academia, should work with government agencies to develop and continually review all existing and proposed regulations in an effort to enable an optimal and accountable environment for all.
If the use of AI tools is not explicitly regulated, and the personal information of data subjects is processed without their knowledge or consent, could place an organization or business in breach of its obligations under the Protection of Personal Information Act (POPIA). The issues raised, and the possible consequences, would then need to be addressed by appropriate policymakers.
People and workface enablement. South Africa already has an unemployment rate of 33%, as of Q2 2023, and AI will very likely lead to further job displacement. As is the case elsewhere in the world, that downside can be offset by the new work opportunities AI could open up. To mitigate against the risk of job losses, employers could be incentivized to retain workers and/or retrain or upskill employees to transition into roles associated with AI capabilities. They should also champion AI-focused businesses—especially start-ups—as new spaces for employment, and should introduce supportive legislation for them.
Collaboration. Through Public Private Partnerships (PPPs), the public and private sectors can join forces and pool resources to roll out AI. Collaboration through PPPs would facilitate proofs of concept and reduce the cost and increase the speed of a major AI scale-up. It could also ensure that AI solutions are accessible and beneficial to all South Africans, not just an elite few. One option in that regard would be to provide localized AI tech free of charge to everyone as a public service. Of course, it would not really be free, as it would be funded by taxpayers’ contributions, but it might be preferable to the alternatives: becoming reliant on foreign-based private industry to provide crucial AI tech, or having no AI tech at all.
Financial underpinning. Other crucial participants in South Africa’s AI rollout will be Development Finance Institutions (DFIs) and private-sector venture capitalists. They will provide relevant financial support and investment opportunities to local businesses—both new and old—and research institutes. They will also facilitate partnerships between international tech companies and local organizations, promoting knowledge exchange and capacity building. This support will foster an ecosystem in which South African AI innovators can thrive.
Reassuringly, South Africa’s AI start-up landscape is far from empty. The country already boasts a variety of start-ups offering helpful AI-enabled services and solutions. Here are three diverse examples:
Technological infrastructure. PPPs and DFIs can jointly embed one further foundation-stone of South Africa’s AI development: tech infrastructure. At the top level, data-sharing platforms are needed for building the large and diverse datasets on which AI models are trained. At a local level, stable and high-bandwidth connectivity needs to be available full-time. Only through a major infrastructure upgrade, especially in remote and under-served areas of the country, will AI’s benefits be fairly distributed regionally and socially.
Once all these underpinning components are in place, AI will be positioned—with minimized risk and maximum equitability—to play a transformative, beneficial role across key aspects of South African society.
For AI and Generative AI to fulfil their potential in easing or even resolving South Africa’s most pressing societal issues, the country’s citizens will have to play their part, collectively and individually. Public and private sectors will need to engage in constant open dialogue, concerted action, and cross-functional collaboration.
As shown above in the use-case profiles, many remarkable benefits have already emerged, and countless more opportunities lie in wait. The risks, known and unknown, will have to be navigated and managed. To that end, the correct legislative framework needs to be put in place—and speedily, to match the speedy development of AI itself.
Stakeholders should persevere in exploiting and refining existing technologies, seeking new beneficial applications, and pursuing needs-informed research. Throughout, they should remain mindful of the risks—notably job losses—and push for stronger regulation and mitigating measures as appropriate. If all goes well, AI will live up to its transformative promise, and transform South African society for the better.
This publication synthesizes invaluable insights from discussions with experts. The project team wishes to thank them all for their time, dedication, and guidance.
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