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Africa|Business|DIGITALISATION|Energy|Engineering|Infrastructure|Innovation|Logistics|Services|Systems|Technology|Training|Solutions|Infrastructure
Africa|Business|DIGITALISATION|Energy|Engineering|Infrastructure|Innovation|Logistics|Services|Systems|Technology|Training|Solutions|Infrastructure
africa|business|DIGITALISATION|energy|engineering|infrastructure|innovation|logistics|services|systems|technology|training|solutions|infrastructure

Digital platforms could boost South Africa’s economy by R91.4bn over next ten years

13th September 2024

By: Natasha Odendaal

Creamer Media Senior Deputy Editor

     

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Digital platforms could provide transformative growth for South Africa’s economy, with projections indicating the addition of R91.4-billion into the country’s economy over the next ten years.

A new research report by Naspers and the Mapungubwe Institute for Strategic Reflection (Mistra) reveals that the digital platforms economy’s contribution to South Africa’s gross domestic product (GDP) could grow from 0.02% in 2022 to 1.38% by 2035.

The study, which explores the untapped potential of South Africa’s digital platform economy – a sector which includes online platforms that facilitate economic transactions – and models its impact, highlights that South Africa stands on the brink of a digital revolution.

“Though still in its early stages, the shift to digital mirrors global trends and offers a rare chance to unlock significant economic potential for our nation,” says Naspers South Africa CEO Phuthi Mahanyele-Dabengwa.

“As one of the country’s largest investors, Naspers is committed to leading this transformation by driving innovation and inclusive growth in this vital sector,” she says, noting that Naspers and its South African entities, including Takealot.com, Mr D, Superbalist, AutoTrader, Property24 and PayU, have made substantial contributions to the economy, generating over R13-billion in economic value, including R1.5-billion in household income, based on 2022 data.

The group has also lowered wholesale and retail trade costs by 0.5% and reduced living expenses by 0.6%, owing to more affordable consumer prices, and enhanced convenience through platform-based businesses.

The research, unpacked in a report titled ‘Our digital horizon: The economic opportunity of digital platform businesses in South Africa’, addresses critical gaps in understanding the true impact of ecommerce and digital platforms in South Africa.

“With limited consensus on how to measure this sector’s full potential, the study aims to redefine how economic value is assessed and unlock new avenues for growth.”

However, for this potential to be realised, collaboration is key.

The research report points out that, while successful economies worldwide are rapidly transforming into digital economies, South Africa’s pace of digital transformation is relatively slow.

To bridge the digital divide, the public and private sectors must join forces to expand digital access, accelerate digital skills to underserved communities and ensure regulations fuel innovation and create a level playing field.

“By doing so, we will ensure that no individual or community is left behind. If we get this right, it will be a game changer for inclusive growth and propelling South Africa into a prosperous digital future,” Mahanyele-Dabengwa says.

The report also highlights key opportunities to drive digital transformation, attract new ecommerce and fintech entrants, foster innovation and promote greater inclusion, as well as the critical need for increased venture capital investment to unlock the full potential of South Africa’s digital economy, especially in underfunded sectors like fintech and healthtech.

The report makes crucial observations and recommendations, given limited publicly available data on this emerging sector in South Africa, continues Mistra executive director Joel Netshitenzhe.

“At its core, the digital platform economy has the potential to drive inclusive and transformative growth. There are vast opportunities before us and it is clear that a thriving digital platform economy could bring enormous value to South Africa.”

“While the foundational elements are in place, significant barriers remain that hinder society from realising this potential. The encouraging central message of the report is that solutions are within reach, but they require urgent collaboration and bold actions from all stakeholders.”

To mitigate the slow pace of digital transformation in South Africa, the report recommends driving collective action among business, government and civil society for faster digitalisation; developing a national digital transformation dashboard to track progress; accelerating digital adoption and improving data privacy and cybersecurity; and broadening marketplace opportunities to spur local industrialisation.

In addition to the slow pace of digital transformation, the report found that the demand for digital skills is growing rapidly.

Science, technology, engineering and mathematics (STEM) graduates in South Africa account for just 18% of the total, compared with over 30% in innovation leaders like India, the United Arab Emirates and South Korea.

In line with this, the report suggests boosting STEM education from the basic level; coordinating digital skills training programmes nationally, and aligning training with high- demand occupations and industry needs.

Further, infrastructure is key to unlocking the promise of the digital platforms economy and artificial intelligence.

“At an average of $1.81 (R33.21) per GB, mobile data costs in South Africa are among the highest, surpassing those in markets like Nigeria, Namibia and Kenya,” the report shows.

There is a need to fast-track high-speed Internet and digital infrastructure expansion; prioritise digital platform infrastructure in national development plans, and improve energy and logistics reliability for digital services.

The report also points to regulations needing to be aligned with the nascent nature of the South African digital platform sector, noting that it can take up to 180 working days to process certain regulatory approvals, which hampers timely access to digital infrastructure and services.

This requires introducing regulatory sandboxes to encourage innovation; supporting hyperlocal platforms to foster digital inclusion; and including the digital platform sector in national economic tracking systems for better regulation.

Lastly, the research found that digital platforms will play a bigger role in economic inclusion and social protection.

Edited by Martin Zhuwakinyu
Creamer Media Senior Deputy Editor

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