SA spending on mobile phones to top R68 billion in 2018
IT spending in South Africa is forecast to reach $26.6 billion (R361 billion) in 2016, an increase of 5.1% from 2015, according to new data from Gartner.
While the IT market is on pace to pick up in 2016, 2015 is proving to be a difficult year for many market segments in South Africa, the research and advisory firm said.
“South Africa has suffered currency effects, as did many developing markets this year,” said Will Hahn, principal research analyst at Gartner. “There were also impacts on communications service providers – the largest IT market segment in terms of spending – as they faced regulations that imposed decreased rates for interconnection and experienced the accelerating decline of fixed services revenue.”
In 2016 however, IT spending in South Africa will return to growth. “Spending on devices will show the highest growth in 2016, up 13% from 2015, while spending on communications services will remain the highest overall — reaching $11 billion.”
Despite its relative wealth and sophistication, South Africa’s future IT market opportunity remains uncertain due to several serious constraining factors, the advisory firm said.
South Africa IT Spending Forecast by Sector (Millions of US Dollars)
| 2015 Spending | 2015 Growth | 2016 Spending | 2016 growth | |
|---|---|---|---|---|
| Devices | 5.568 | 6.7% | 6.294 | 13.1% |
| Data Centre Systems | 0.635 | -3.2% | 0.666 | 4.9% |
| Enterprise Software | 1.869 | -1.0% | 2.042 | 9.3% |
| IT Services | 6.311 | -5.0% | 6.544 | 3.7% |
| Communications Services | 10.949 | -9.1% | 11.075 | 1.2% |
| Overall IT | 25.330 | -4.3% | 26.620 | 5.1% |
“Chief among these are shortfalls in electric power supply, uncertainty and delays regarding large mergers and acquisitions, deterioration of the local currency against the dollar and euro, and ongoing labour disputes in key market sectors,” said Hahn.
“These and other contributing factors have led to low business confidence and increased concern that other locations in Sub-Saharan Africa — chiefly Nigeria or Kenya — could someday overtake South Africa as the chief “hub” market for regional investment.”
Gartner pointed out that while other locations’ markets grow more quickly, particularly in communications, the local market remains far more mature and sophisticated.
South Africa’s IT market revenue is small compared with Brazil, Russia, India and China (the other four emerging BRICS markets), but its spend per capita is still very high.
Gartner said that the device segment is outpacing all other segments for spending growth in South Africa.
It predicts that annual spending on mobile phones will break the $5 billion (R68 billion) mark by 2018.
South African mobile app developers are well positioned to take full advantage of this growth, as well as to deliver relevant offerings further into the African continent, taking advantage of the burgeoning markets to the North, Gartner said.
“South African companies have a rich understanding of both the needs of African communities and the complexities associated with their cultural and language diversity.Local developers also have the world-standard engineering skills required to develop services for Africa,” said Richard Marshall, research director at Gartner.
More on tech in South Africa
Mobile hands-free kit myth debunked
Things South Africa is good at: banking, mobile and regulation
Loading ...