South Africa’s digital economy is the most developed in Africa, and one of the fastest growing in the world.
This is according to the new Digital Evolution Index developed by MasterCard and The Fletcher School at Tufts University that tracks a country’s movement toward digital evolution, gauges progress and assesses challenges in 50 countries comprising the Index.
South Africa ranks 33 out of the countries measured by the index in digital readiness, which is defined by the markets’ ability to support and encourage digital commerce and payments.
In Africa, it ranks ahead of Egypt (48), Kenya (49), and Nigeria (50).
South Africa also emerged as the fourth fastest growing digital economy behind China, Malaysia and Thailand, the index found.
“South Africa’s speed of growth can be attributed to the rapidly increasing proportion of the population with Internet access, an 86% adult mobile phone penetration rate, and a highly developed telecommunications network,” said Ted Iacobuzio, VP, Global Insights, MasterCard.
“However, what is significant is that all four of the African countries measured share a common trait of moving at a high rate of speed toward digital evolution, demonstrating huge growth potential for e-commerce.”
The Index analyses four key underlying drivers and barriers that govern a country’s evolution into a digital economy:
- Demand (consumer demographics, income and internet access);
- Supply (technology and infrastructure);
- Institutional Environment (governmental policy); and
- Innovation (environment for creating startups and the overall competitive landscape).
Each country is given an overall digital readiness score between 0 and 100, which is derived from an average score of the four interdependent drivers.
South Africa is seen as a ‘Break Out’ country with an overall score of 30 out of 100 in 2013. Its score jumped from 24 to 34 between 2008 and 2012, a substantial increase compared to other countries.
‘Break Out’ countries are typically developing countries that currently have low readiness scores, but are rapidly evolving, Mastercard said.
While infrastructure investments in South Africa will drive e-commerce to achieve a likely 30% growth rate in 2014, the Index indicates that demand for e-commerce currently lags the global average.
“South Africa may have a relatively average Index score overall, but its digital landscape is evolving rapidly. If this evolution continues at its current rate, South Africa has the potential to grow into a strong digital economy. It is a prime candidate for becoming a ‘Stand Out’ nation in the future,” said Iacobuzio.
Globally, Singapore, Sweden and Hong Kong are the top three countries on the Index with the most active and advanced digital economies with scores of 56, 55 and 53.5 respectively.
The United Kingdom and Switzerland round out the top five, while the United States ranks sixth among the 50 countries measured.