Internet economy grows in South Africa

South Africa is steadily moving into the internet economy which has grown to be worth R59bn or 2% of the country’s GDP in 2011.

This is according to a study conducted World Wide Worx for Google South Africa. The by Internet Economic Impact Study revealed the growing importance the Internet has as an enabling tool for business communications, collaboration and transactions.

“With the number of Internet users having begun accelerating in 2008, the number of experienced users will begin accelerating in 2013, and will continue to do so for the following five years,” said World Wide Worx MD Arthur Goldstuck. The result is that an Internet economy worth R59-billion in 2011 and making up 2% of the SA economy could grow to as much as 2.5% of the economy by 2016.”

“To put this into perspective, the agricultural sector made up only 2.2% of GDP in the last quarter of 2011. Looked at it another way, it is likely that over the next five years, the Internet economy will begin approaching the size of the construction sector – an estimated R120-billion in 2011, suggesting this is potentially one of the new building blocks of the South African economy,” said Goldstuck.

 The study showed that the total spent by consumers, small and medium enterprises (SMEs), and government on products and services via the Internet in 2011, as well as on Internet access and infrastructure, is R59-billion.

“What is interesting here is that the largest contributor to this total is not, as most people would assume, the investment by service providers in infrastructure. While the mobile networks and fibre providers have certainly spent their fair share on infrastructure – a total of R13.5-billion – this pales beside the R29.2-billion spent on Internet presence and access,” said Goldstuck.

“The study further indicates that e-commerce is growing at a rate of around 30% a year, and is showing no signs of slowing down. In fact, taking into account the fact that a number of major consumer brands and chains have not yet devised comprehensive online retail strategies, the scope for future growth is even greater.”

He said certain sectors, notably the airline industry, have already fully embraced e-commerce. Airlines are already comfortable with e-ticketing and are rapidly migrating ticket sales online. This is demonstrated by 2011 sales of nearly R9-billion.

Luke Mckend, Google SA Country Manager, adds: “No business, industry or government can ignore the scale of the Internet and the impact it is having.  It presents a host of opportunities.  Small and medium enterprises (SMEs) have been uneven in their uptake, but they are moving online in increasing numbers and are committed to doing so.”

World Wide Worx SME survey has shown that around 410 000 SMEs in South Africa have a website, representing 63% of active, formal SMEs. “The full impact of these websites on the economy is placed in perspective by the number of SMEs that would not have survived without one. Approximately 150 000 SMEs in SA would go out of business, were it not for their Web presence. Since SMEs account for some 7.8-million jobs, this means that as many as 1.56-million jobs would be in jeopardy were it not for the Internet,” said Goldstuck.




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