Internet economy in SA not as huge as believed, report says

Analysts and many Internet enthusiasts have for a long time now believed that South Africa has the largest Internet economy in Africa, a new report by World Wide Worx, in partnership with Google South Africa, reveals otherwise.

The Internet Economic Impact Study revealed that Internet economy contributes 2 percent to South Africa’s gross domestic product (GDP). Moreover, this contribution is rising by around 0.1 percent a year, meaning it should reach 2.5 percent by 2016.

The Internet economy comprises access to and use of the Internet, investment in infrastructure and expenditure in Internet activity in a country. These include Internet infrastructure, money spent on online retail and online advertising, and business and Government engagement with the Internet. (Boston Consulting Group: The Connected World: The $4.2 Trillion Opportunity, March 2012)

According to the report, the total spent by consumers, small and medium enterprises (SMEs), and Government on products and services via the Internet, as well as on Internet access and infrastructure, is R59-billion (US$ 7.3 billion).

The biggest contributor to Internet economy is the amount spent on Internet presence and access, at R29.2-billion (US$ 3.6 billion) and not the investment made in fibre and other data infrastructure by the mobile networks (R13.5-billion/ US$1.7 billion), as is often assumed.

The study also found out that e-commerce is growing at a rate of around 30 percent per year, despite the fact that major consumer brands and chains have not yet devised comprehensive online retail strategies, an indication that this growth will increase significantly by 2015.

According to SME Survey 2012, 410,000 SMEs in South Africa have a website, representing 63 percent of active, formal SMEs. The research shows that SMEs with a website are far more likely to be highly profitable than those without.

Internet impact on South African economy is yet to be felt at 2 percent contribution to its GDP. However, the impact will be felt more by 2016, when Internet Economy will contribute 2.5 percent of SA’s economy going by its current 0.1 percent growth annually.

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