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Cablegate: Cisco Addresses Ict Skills Shortage in South Africa One

VZCZCXRO1546
RR RUEHBZ RUEHDU RUEHJO RUEHMR RUEHRN
DE RUEHSA #2666/01 3440541
ZNR UUUUU ZZH
R 090541Z DEC 08
FM AMEMBASSY PRETORIA
TO RUEHC/SECSTATE WASHDC 6671
RUCNSAD/SOUTHERN AF DEVELOPMENT COMMUNITY COLLECTIVE

UNCLAS SECTION 01 OF 03 PRETORIA 002666

SENSITIVE BUT UNCLASSIFIED
SIPDIS

DEPT FOR EEB/CIP/KATHERINE TOWNSEND

E.O. 12958: N/A
TAGS: ECPS EIND EINV EINT ETTC SOCI TINT USTR SF CH
SUBJECT: CISCO ADDRESSES ICT SKILLS SHORTAGE IN SOUTH AFRICA ONE
CLASS AT A TIME

REF: PRETORIA 2665

1. (SBU) Deputy Chief of Mission (DCM), Commercial Counselor,
Economic Counselor and ICT Officer attended the graduation of the
inaugural class of Cisco Global Talent Acceleration Program on
November 28. The DCM provided the key-note address at the
graduation ceremony. Cisco executives outlined the company's
investments in South Africa, which included educational initiatives
aimed at improving skills development through their Innovation Hub.
They also raised concerns about unscrupulous Chinese commercial
activities in the African ICT sector. Embassy Officers offered
advice on neutralizing the impact of Chinese activities.

--------------------------------------------
CISCO GLOBAL TALENT ACCELERATION PROGRAM
FACILITY TO SERVE AS A FOUNDATION FOR
ICT SKILLS DEVELOPMENT IN SUB-SAHARAN AFRICA
--------------------------------------------

2. (U) Cisco celebrated the graduation of its inaugural class of
Global Talent Acceleration Program (G-TAP) students in Johannesburg
on November 28. The DCM provided the keynote address and
congratulated the 14 graduates for their achievements and challenged
them to utilize their skills to positively impact their communities
and nation. Cisco G-TAP Program Director John Livingstone also
addressed the graduates and explained that the South African program
is only one of three training academies of its type in the
developing world. The Gauteng facility (launched in January 2008)
was the second G-TAP initiative to be launched in emerging
economies, following the establishment of a facility in Amman,
Jordan last year. A third center has since been launched in
Bangalore, India with addition facilities slated for China and Latin
America.

3. (U) Cisco selected South Africa as the launch pad for its G-TAP
in Sub-Saharan Africa to support emerging African governments and
organizations in addressing ICT skills shortages. These skills are
crucial to helping SA's economy grow. Developing countries lag in
broadband ICT adoption. Research shows ICT and broadband adoption
can have a positive and measurable effect on gross domestic product
of two to three percent. G-TAP is a long-term Cisco initiative
aimed at developing next-generation local network consulting
engineers (NCEs) for the company and its clients. Recruits for the
first class were geographically diverse and the overwhelming
majority of trainees were from historically disadvantaged groups.

4. (U) The initial focus of the Gauteng G-TAP facility was on South
Africa where Cisco aims to employ and train South African-based
recruits at the professional and associate levels. Selected
trainees participated in a rigorous program that combined theory,
industry exposure and hands-on experience. These trainees received a
salary and underwent training in small groups. This enabled G-TAP
to put a strong emphasis on technical and professional training and
mentorship, as well as on-the-job training in North Carolina. The
majority of the graduates are expected to be absorbed by Cisco. The
remaining graduates should be offered employment with a Cisco
partner company.

5. (U) Cisco executives hope to expand the reach of the South
African G-TAP facility in three directions within the next twelve to
eighteen months. Initially, a professional track will be added to
attract students with three to five years' work experience. Next,
Cisco partners will have the opportunity to enroll their own
employees in G-TAP. Finally, students will be recruited to the
Qemployees in G-TAP. Finally, students will be recruited to the
Johannesburg facility from a range of countries in emerging Africa,
effectively positioning South Africa as a technology leader in the
region.

6. (U) The entire Sub-Saharan African region is experiencing
tremendous growth in ICT, but skills shortages are reducing the full
economic impact of the boom. Instead of importing talent from other
regions on a temporary basis, G-TAP helps Cisco to provide customers
with a long-term solution in the form of a highly-skilled and
well-trained local work force. Cisco executives plan on recruiting
talent from the Southern Africa Development Community (SADC) next
year. They cited Namibia and Angola as the countries in the region
with the most potential for ICT growth. In the longer term, they
would also like to develop talent from Nigeria. The skills that
G-TAP provides to its graduates contribute to the development of the
local knowledge base and infrastructures that are critical for
accelerating and sustaining economic growth.

------------------------------------
OTHER SKILLS DEVELOPMENT INITIATIVES
------------------------------------

7. (U) Cisco announced a R215 million ($21.2 million) investment for
its Innovation Hub Technology Center in September. A series of
programs coordinated through the hub are expected to drive R1

PRETORIA 00002666 002 OF 003


billion ($100 million) in gross domestic product growth over five
years. The Innovation Hub Technology Center will host ICT
initiatives including an Innovation Lab, the G-TAP, the Cisco
NetVarsity, an Entrepreneur Institute, and a Software Development
Program. The Innovation Hub Technology Center is expected to create
a minimum of 200 direct and 800 indirect employment opportunities.
This includes the advancement of intellectual property rights
expertise, the development of design and network engineers, local
software development, state-of-the-art networking communications
laboratories, access to business guidance, and a showcase for
venture capital providers looking to fund solutions or businesses
incubated in the hub. Cisco hopes these initiatives will cultivate
entrepreneurial awareness and develop technical skills in South
Africa.

----------------------------------
SOUTH AFRICAN ICT BUSINESS CLIMATE
----------------------------------

8. (SBU) In response to Embassy queries about the business climate,
Cisco executives noted a positive change in the tone of their
relationship with the South African government and
government-controlled Telkom after the recent change in government.
(Note: President Mbeki was ousted following in a change of
leadership in the African National Congress in September 2008.)
However, they also observed delays in the business decision-making
cycle at all levels of government in anticipation of the spring 2009
general election and expected transition in the national leadership.
They cited the drawn-out legal battle between the Department of
Communications and ICT company Altech regarding new network licenses
as slowing down ICT liberalization (Reftel) in South Africa. They
are also noticed inflation in the costs of licenses for new
entrants.

9. (SBU) Cisco executives added that they had reached a significant
breakthrough in their relations with Telkom after two to three years
of difficult negotiations. Cisco recently signed a Memorandum of
Understanding with Telkom and Telkom officials are beginning to
realize that they will need Cisco assistance to become more
competitive in an increasingly competitive ITC market. Telkom CEO
Ruben September directly calls Cisco counterparts now when he used
to fail to respond to their calls. According to Cisco executives,
Telkom has already wasted time in transitioning to a more
liberalized ICT market due to bureaucratic inefficiencies. Now that
Telkom is facing stiff competition with the end of its monopoly
regime, September has acknowledged that the company will "need
support to transition to a real-world, market-based system."

-------------------------
CONCERN REGARDING CHINESE
BUSINESS PRACTICES
-------------------------

10. (SBU) Cisco executives expressed concern regarding unscrupulous
Chinese business practices in the Southern African ICT market. The
said the Chinese competitors employed "strange tactics and
behaviors" that could undermine Cisco's investments in the region.
For example, public sector officials are "being flown first-class to
China and wined and dined." Executives also noted that the Chinese
government has announced a desire to match U.S. trade with South
Africa and to open a network center to promote this goal. Cisco
executives are not worried about raising capital for their
initiatives in South Africa. However, they are worried that the
Chinese "advocacy" activities might influence South African
government decision-making.
Qgovernment decision-making.

11. (SBU) The DCM encouraged Cisco executives to work with the U.S.
Mission to promote their positive contributions to the South African
ICT sector. The Economic Counselor expressed an intent to compile
information on the positive corporate social responsibility
initiatives being implemented by U.S. ITC companies to assist with
advocacy efforts. The Commercial Counselor suggested that the USG
could also organize orientation visits for South African officials
to the U.S. In addition, the USG could offer to host conferences or
provide other technical assistance.

12. (SBU) Comment. South Africa is on the brink of an ICT broadband
revolution in the next year or two with the introduction of
market-based competition and increased infrastructure investment.
However, high unemployment rates, lack of access to technology, and
a lack of qualified local ICT professionals have thwarted efforts to
fully realize the benefits of improved efficiency and productivity
that usually accompany ICT adoption. Initiatives launched by Cisco
and other U.S. ICT companies to develop entrepreneurial and
technical skills would begin to address the dual problems of high
unemployment and skills deficiencies, one of the major constraints
to economic growth in the country. These initiatives would also
help to alleviate the high levels of social and economic
inequalities by providing training and employment opportunities to

PRETORIA 00002666 003 OF 003


historically disadvantage groups. End Comment.

BOST

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