How South Africa can grow its GDP

A new report sheds light on the growing opportunities around the world, finding that a 20% increase in ICT investment will grow the GDP of a country by 1%.

The 2015 Global Connectivity Index, published by telecoms infrastructure and mobile handset company Huawei, ranked 50 countries globally according to their ICT capability, including South Africa.

With an Index score of 41 out of 100, Huawei ranked SA at 33 out of 50 countries surveyed, based on five major ICT technologies including cloud, the Internet of Things
(IoT), Big Data, broadband, and datacenter.

According to Huawei, SA has a GDP per capita of $13,418, while the country’s IT workforce is at 1.1% of the population, and IT spend at 3.9% as a percentage of GDP.

In 2013, McKinsey & Company said that South Africa’s iGDP, which measures the Internet’s contribution to overall GDP, was at 1.4%.

Huawei puts smartphone penetration in SA at 31% with mobile broadband users at 18.4%.

The China-based firm, which has 1,000 employees in SA, says that the country’s strength lies in the fact that mobile Internet and smartphones are driving m-Commerce uptake.

Demand for laptops and tablets continue to increase as 3G internet access costs go down. The introduction of cheaper brands continues to drive demand for tablets in South Africa.

A challenge for South Africa, according to Huawei, is that demand has been low due to shortfalls in e-Commerce, cloud, broadband and mobile BB.

“Policy reforms to increase mobile penetration and broadband in rural sector through fiber optic network like India and other developing nations will help increase domestic demand. Fixed broadband should be relatively inexpensive to increase e-Commerce,” the report said.

Other African countries mentioned in the Index include Egypt (36th), Morocco (42nd), Algeria (43rd), Kenya (46th), Nigeria (47th), Ghana (48th).

With an Index score of 85, the US leads the index, seen as the primary market for capital investment and revenue in the ICT industry. Sweden is ranked 2nd with a score of 82, due to its advanced  telecom and broadband market. The Scandinavian country has a high penetration of 4G/LTE with high adoption of e-Commerce and mobile commerce.

Singapaore, Switzerland and United Kingdom represent countries 3-5 on Huawei’s list, with scores of 81, 78, and 75 respectively.

Singapore has and advanced network facilitating 4G/LTE and high speed fixed broadband, while Switzerland has some of the highest broadband penetration rates in Europe. The country has a groing fibre optic network whiel its citizens are avid online shoppers.

The UK has a higher disposable income bracket and mature ICT market. It has a the largest e-commerce market in Europe, while e-government initiatives are leading the country globally.

The report forecasts that the most important necessity for IoT – connectivity – will become so ubiquitous and widespread that by 2025, sensors will be deployed and connected to a network at a rate of almost 2 million per hour or just over 47 million per day.

“By 2025, we could see the number of IoT devices  installed, connected, and autonomously managed will reach 100 billion, up from 35 billion just five years prior in 2020,” and 12 billion in 2015, the report said.

Amongst developing economies, Huawei says that Chile, South Africa, and China have the biggest potential.

A country’s potential is analyzed based on various indicators, such as ICT patents, IT workforce, research and development (R&D), software developers, and market projections for IoT, cloud, Big Data, broadband, and datacenters.

Among the developing countries, Chile leads in ICT skills that cover IT workforce and software developers, while China leads in ICT patents and R&D. In contrast, South Africa leads in market projections for cloud, IoT, Big Data, broadband, and datacentre.

BusinessTech is attending the Open ROADS to A Better Connected World event in Shenzhen, China, as a guest of Huawei.

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How South Africa can grow its GDP