Microsoft invests $70 million in South Africa for job creation and AI advancement

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May 24, 2024
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2 min read
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  • Microsoft South Africa is investing R1.3 billion ($70 million) in the South African economy as part of a 10-year agreement with the Department of Trade, Industry, and Competition (DTIC).
  • According to the software company, the investment will go towards developing small, micro, and medium-sized enterprises (SMMEs), creating local jobs and preparing the country for AI transformation.
  • The investment is expected to boost the country's AI, projected to reach US$0.90 billion in 2024 and grow at a 28.22% annual rate (CAGR 2024-2030), resulting in a market volume of US$4.00 billion by 2030.

According to the DTIC, the investment will go towards an enterprise development initiative worth R663 million ($34.6 million), focusing on technology start-ups owned and operated by black South African entrepreneurs and the development of new solutions in disruptive technologies. 

A R347 million ($18.9 million) skills development initiative will provide intensive training to young black South Africans through certification courses and leadership, while an R&D initiative of R160 million ($8.7 million) will fund research programmes.

South Africa has recently increased its efforts to adopt artificial intelligence to drive economic growth, improve efficiency, and address societal challenges. 

In April 2024, the country unveiled a draft of its national AI plan. This comes after it established the AI Institute of South Africa (AIISA) and the Centre for Artificial Intelligence Research (CAIR) several years ago. 

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Kalane Rampai, Microsoft SA MD, acknowledged the importance of AI, noting that technology is changing how people work, necessitating the need for people to have the necessary skills to remain relevant.  

“We believe there is a massive opportunity for those willing to skill up on AI. At the same time, organisations that empower employees with AI tools and training will attract the best talent,” he added. 

Regarding Small and medium-sized enterprises (SMMEs), Rampai stated that the investment will provide a platform for the sector's growth through technology, digital transformation, and market opportunities.

SMMEs are considered the backbone of South Africa’s economy, contributing nearly 40% of the country's gross domestic product (GDP) and employing around half of the workforce.

Despite the sector's importance, reports indicate that businesses face funding gaps. The majority of business owners and entrepreneurs rely on personal savings or loans.
South Africa launched 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, to harness AI's potential in the country's defence sector, as well as national development and security.

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