AI will supercharge South African businesses

Op-Ed written by Lars Gumede for City Press (News24) based on his Paper for the Inclusive Society Institute of South Africa titled, 'How SA Can Leverage the Artificial Intelligence Revolution'. Available at: https://www.news24.com/citypress/voices/lars-gumede-ai-will-supercharge-south-african-businesses-20250126

Paper: https://www.inclusivesociety.org.za/post/how-south-africa-can-leverage-the-artificial-intelligence-revolution

FULL TEXT

By Lars Gumede

As Artificial Intelligence (AI) continues to transform industries and economies worldwide, South Africa stands at a pivotal moment. By strategically leveraging AI, South African businesses—both small and large—can boost their efficiency and productivity, innovate, and position themselves as key players on the global stage.

Companies across the globe have demonstrated how AI can supercharge efficiency and productivity, reduce costs, and transform market standing. South African companies; small, medium and large, must follow suit if they wish to compete globally.

AI: The Next Industrial Revolution

The rise of AI has been likened to the Industrial Revolution and the internet boom, but experts believe its potential impact may be even more profound. As new breakthroughs occur every day, it becomes increasingly essential to understand AI, its opportunities and risks. With AI systems capable of accomplishing human tasks with much greater efficiency, accuracy and cost-effectiveness, proactive companies around the world are rushing to integrate AI into their operations.

Such integrations are projected to automate 43% of all work tasks by 2027, according to the World Economic Forum’s Future of Jobs Report (2023). This corresponds to 83 million jobs eliminated in easily automated and highly repetitive areas.

Balancing these job losses, will be new jobs in entirely new industries and professions. What these new industries will be is anyone’s guess, what’s important is to be adequately positioned for an AI-driven future.

The key for South African companies lies in building systems and positioning its workforce for this AI-driven future. Companies around the world are racing to lock in the advantages of being the first movers. South African companies must adopt a similar strategy to remain competitive.

Global AI Adoption Success Stories

To understand the potential of AI, we can look at successful implementations in the private sector worldwide. Swedish fintech giant Klarna is a prime example. Klarna deployed an AI-driven customer service agent that now handles two-thirds of its customer service inquiries in its global payments business.

The system handles the equivalent of 700 full-time customer service agents. It is more accurate than human agents – with a 25% drop in repeat inquiries and has reduced the average query resolution time from 11 minutes to 2 minutes. It has capabilities that cannot be matched by human agents. It is available 24 hours a day, in 23 markets and can communicate in 35 languages.

The system is “designed to enhance the shopping and payments experience for Klarna’s 150 million consumers worldwide”, per a company statement and, has led to a $40 million USD profit improvement for the group in 2024. This system, which was a result of a joint experiment by Klarna and OpenAI, will likely become the industry standard globally in the coming years.

For South African businesses, particularly in customer-facing industries like finance, retail, and telecommunications, AI adoption could yield similar results.

Another noteworthy example is Moderna, a global pharmaceutical leader. In 2023, Moderna undertook a massive reskilling and modernization program affecting all aspects of its business. Partnering with OpenAI, it modernized its operations by introducing generative AI tools like ChatGPT Enterprise. “We’re looking at every business process—from legal, to research, to manufacturing, to commercial—and thinking about how to redesign them with AI”, said Stephane Bancel, Moderna’s CEO.

The company set out to achieve a “100% adoption and proficiency” of generative AI by all its employees. To do this, the company assembled a dedicated team of experts which created personalized AI learning companions augmented by group research and training exercises. The company’s internal chatbot, mChat, has been adopted by 80% of the company and has 2,000 active weekly participants with employees engaging in 120 conversations with AI per week to enhance knowledge and performance.

“If we had to do it the old biopharmaceutical ways, we might need a hundred thousand people today” explained Bancel. Utilizing advanced AI systems, a few thousand people can perform like a team of 100,000, according to a Moderna statement.

AI represents an opportunity to innovate faster, supercharge efficiency and boost global competitiveness.

AI in South Africa: Current Landscape

South African businesses are beginning to explore AI adoption, albeit at varying paces. According to PwC’s Africa Business Agenda Digital Transformation report, 52% of CEOs are already using generative AI tools, with many reporting improved efficiencies and profit margins. While only 27% of companies have implemented AI organization-wide, this number is expected to grow rapidly as awareness increases. CEOs are recognizing AI's potential to fuel growth, with PwC’s report linking a 1.4% profit margin improvement to its adoption.

For small and medium-sized enterprises (SMMEs), AI presents a unique opportunity to scale operations without the traditional barriers of cost and complexity. AI tools can automate administrative tasks, optimize supply chains, and enhance customer service, allowing SMMEs to compete with larger corporations. For example, AI-powered chatbots and data analytics tools can help businesses provide personalized customer experiences and make data-driven decisions, aiding growth and innovation.

AI Strategy for Businesses

To harness AI effectively, South African businesses—whether small startups or established corporations—must take proactive steps:

• Conduct Full Analysis of Current Systems: Evaluate existing processes, systems and workflows, and research global adoption to identify potential areas for AI adoption.
• Invest in AI Education and Training: Building a skilled workforce is critical. Companies should offer AI-focused training programs tailored to company operations.
• Adopt AI Incrementally: Businesses can start small by integrating AI tools for specific tasks such as customer support, data entry and analysis, or supply chain optimization.
• Focus on Measurable ROI: Companies should approach AI as an investment, not an expense. Measuring ROI in terms of efficiency gains and cost savings will help executives build a strong business case for broader AI implementation.

Artificial Intelligence offers businesses the opportunity to enhance efficiency, reduce costs, and boost their global competitiveness. By learning from successful implementations around the world and prioritizing AI adoption, businesses can position themselves as leaders in the AI-driven economy. From SMMEs to large corporations, embracing AI is no longer optional but necessary for growth, efficiency and innovation.