Microsoft South Africa and the Department of Trade, Industry, and Competition (DTIC) have reached a 10-year deal for Microsoft to spend R1.3 billion ($70 million) in the South African economy.

The software company claims that the funds would support the growth of small, micro, and medium-sized companies (SMMEs), generate employment locally, and get the nation ready for the shift brought about by artificial intelligence.

The country’s AI market is anticipated to reach US$0.90 billion in 2024 and increase at a 28.22% annual rate (CAGR 2024-2030) with a market volume of US$4.00 billion by 2030, thanks to the investment.

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The DTIC reports that the money would be used for an enterprise development programme valued at R663 million ($34.6 million), emphasising technology start-ups run by black South African entrepreneurs and creating novel solutions leveraging disruptive technologies.

A R160 million ($8.7 million) R&D effort would finance research programmes, while an R347 million ($18.9 million) skills development initiative will give young black South Africans intense training through certification courses and leadership.

South Africa’s National AI Plan Aiming For Societal Solutions and Economic Growth

Recently, South Africa has stepped up its attempts to use AI to solve societal issues, boost productivity, and promote economic growth. The nation presented a draft of its national AI plan in April 2024.

This follows the establishment of the Centre for Artificial Intelligence Research (CAIR) and the AI Institute of South Africa (AIISA) a few years ago. Microsoft SA MD Kalane Rampai recognised the significance of AI, pointing out that technology is altering the nature of work and that individuals must possess the requisite skills to be competitive.

“We think there’s a huge opportunity for people willing to learn more about AI.” He continued that the most incredible talent will be drawn to companies that provide their staff with AI tools and training.

Boosting SMMEs Through Tech

According to Rampai, the investment would provide a platform for the growth of small and medium-sized enterprises (SMMEs) through technology, digital transformation, and market opportunities.

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SMMEs employ about half of the workforce and account for nearly 40% of the GDP of South Africa, making them the backbone of the nation’s economy.

Reports show that despite the sector’s importance, businesses are experiencing financial deficits. Most entrepreneurs and business owners rely on loans or personal funds.

To maximise the potential of artificial intelligence (AI) in the nation’s defence industry, as well as in national development and security, South Africa established the Defence Artificial Intelligence Research Unit (DAIRU) on May 3, 2024, as a military-focused AI hub at the Military Academy in Saldanha, Western Cape.