SA IT spend up 7.1% in 2011
Overall IT spending in South Africa increased 7.1% year on year in 2011 to total $12.91 billion, according to the latest figures from ICT research group, IDC.
IDC’s study points out that advances in mobile communications and technology resulted in high levels of consumer spending on PCs and smartphones in 2011, with the home sector recording the largest share of total IT expenditure in the country, at 20%.
“The growing availability of wired and wireless access, along with decreasing communications costs, is driving sales of notebooks, netbooks, tablets, and smart handheld devices among consumers, while egovernment policies are propelling IT spending by various government departments as they seek to automate their processes,” said Jebin George, a senior research analyst at IDC Middle East, Africa, and Turkey.
Along with the home and public sectors as South Africa’s leading verticals are the combined transport, communications, and utilities vertical and the combined finance industry, with these four verticals together accounting for 72.6% of total IT spending in the country in 2011.
The research found that the bulk of the spending in the communications vertical related to infrastructure upgrades to undersea cables and broadband networks, while increased back-office automation to counter competition and support new channels was responsible for driving spending in the finance vertical.
According to IDC, the key themes of IT investment remain operational efficiency, cost optimization, innovation, and customer centricity.
While consumers, government entities, and large corporations in the communications, finance, and manufacturing sectors remain the country’s biggest investors in IT, opportunities for significant growth exist in the fast-growing SMB segment, with such businesses dominating South Africa’s business services vertical, especially in the IT, tourism, and real estate sectors.
The government’s plan to develop the SMB segment as part of its Accelerated and Shared Growth Initiative (AsgiSA) is expected to give a further impetus to spending in this vertical, IDC said.
Increasing IT spending by government entities, businesses, and consumers is being boosted by a growing population, increasing middle-class wealth, and continuing infrastructure expansion, thus making South Africa a more attractive market for IT vendors, the research firm said.
On Tuesday (30 October), Stats SA published the results of its census for 2011, which revealed that the country’s population increased by about seven million people to 51,770,560 between 2001 and 2011.
“South Africa is at the forefront of the growth currently being seen in the African continent’s middle-class population, especially with its Black Economic Empowerment (BEE) program,” said George.
“In line with this, we expect to see a surge in demand for products and services across verticals, as a large percentage of South Africa’s low-income population becomes wealthier, which will bring significant advantages to the economy and result in increased IT investment.”
Looking ahead, overall IT spending in South Africa is set to rise steadily at a compound annual growth rate (CAGR) of 6.2% over the coming years to reach $17.42 billion in 2016.
Government will constitute the fastest-growing vertical during this period, with IT investment expanding at a CAGR of 11.6% through 2016.
“Government, transport, communications, and utilities will remain the biggest-spending verticals, while from a technology perspective, investment growth will be strongest in software and IT services,” IDC said.
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