Tuesday, May 29, 2012 | 12:33 PM
The Quiet Engine Driving the South African Economy
When people think about South Africa’s economy, usually the first sectors that comes to mind are mining and agriculture. But what about the less visible sectors? What role do they play? Together with World Wide Worx, we were particularly interested in the technology sector and the contribution the Internet is making to South Africa’s economy. The resulting study, released this week, showed that the Internet is actually the ‘quiet engine’ that is driving the South African economy. Whilst South Africa hasn’t yet fully embraced the Internet, the sector contributes up to 2% (or $7.1 billion/R59-billion) of the country’s GDP.
By way of comparison, the Internet economy is comparable to sectors such as Agriculture (2.1%) and Utilities - Electricity, Gas and Water (2.6%). What we find especially exciting is that the Internet economy is expected to grow faster than the offline economy, and this figure could reach R79-billion (or 2.5% of GDP) by 2015.
Who will benefit from the growth of the internet economy in South Africa? The WWW study found that SMEs (small to medium enterprises) will benefit the most, not major IT companies.
The research shows, for example, that SMEs with a website are far more likely to be highly profitable than those without. SMEs with a website are almost 3 times more profitable than those without. Further, approximately 20% of all small businesses surveyed revealed that they would not be able to survive without an online presence. With SMEs accounting for about 7.8-million jobs in the country, this means as many as 1.56-million jobs would be in jeopardy if not for the Internet.
We think the ‘quiet engine’ could still be bigger and louder: that is, we’d like to see more South Africans online. About 17% of the population is currently online with only about 2% having access to fixed-line broadband. A much higher percentage are getting online via their phones, and this figure is expected to shoot up in 2013, as smartphone sales rise rapidly. However, South Africa still lags significantly behind some of the the biggest Internet user bases of Africa, such as Kenya (25%), Egypt (26%), Nigeria (29%) and Morocco (49%).
The Internet Matters report encourages South Africa to put the Internet at the heart of its policymaking in order to remain competitive on the global stage. Some of the ways the government could do this include: investing in broadband infrastructure and putting in place policies to enable last-mile access by the private sector; unblocking regulatory challenges around right of way permits; taking a proactive approach with regards to reallocating unused spectrum; and making e-governance a reality by putting government services online; encouraging SMEs to have a strong presence online. We hope that this report will encourage both government and the private sector to take bold steps towards ensuring universal broadband access by 2020 as per government targets.
Steps like these ensure that the economic benefits of the Internet are enjoyed sooner rather than later, and by many rather than a few.
You can download a copy of the report at http://www.internetmatters.co.za/.
Posted by Fortune Mgwili-Sibanda, Public Policy Manager, South Africa
Le moteur silencieux de l’economie Sud-Africaine