Internet economy ‘set to rival construction’ in contribution to GDP in SA

SA’s internet economy contributed about 2% to gross domestic product (GDP), or R59bn, last year, and this was likely to rise to 2,5% over the next three years, according to research by World Wide Worx released yesterday.

Internet usage, boosted by better infrastructure and ever cheaper data costs, has grown considerably in the past decade. This has made it easier for companies to offer more online services.

“What we will see is that the internet will start to rival the construction industry’s contribution to GDP by 2016,” said Arthur Goldstuck, MD of World Wide Worx, an internet research company.

However, SA’s industry was well behind those of other developing countries in the Group of 20 (G-20) industrialised countries, according to data from the Boston Consultancy Group, which found that the average contribution to GDP in these countries stood at 3,6%. This was projected to grow to 4,8% by 2016.

The Boston data looked at the internet economy in the G-20 and found that it would increase from $2,3-trillion last year to $4,3trillion in 2016.

The World Wide Worx report indicated that internet penetration in SA would grow exponentially over the next few years from the current 4-million users to more than 13-million by 2015.

The internet economy refers to access to and use of the internet, investment in infrastructure and expenditure in internet activity in the country.

The research found that R2,6bn had been spent in SA on online retail goods last year, with online air ticket sales accounting for an additional estimated R9bn in revenue.

Also, money spent on internet access and presence amounted to R29bn, while online advertising accounted for R1,5bn and investment in data infrastructure accounted for R15,5bn. The government’s spend on broadband infrastructure came to R1,3bn, according to the report.

“The sector is growing despite stringent efforts to regulate the internet providers. If these logjams are removed to facilitate growth it will stimulate overall economy and employment. If they do that it will make our projections seem like low-hanging fruit,” said Mr Goldstuck.

The report recommended that the government and policy makers sort out a few hurdles to facilitate growth in the sector. These included cutting red tape in licensing vendors, eliminating contradictory regulations, and introducing more incentives to encourage research and development.

Deputy Communications Minister Stella Ndabeni said the government understood the valuable role the internet would play in the economy. It was imperative the government partnered with operators in the information and communications sector to increase accessibility, especially in rural areas. Among the department’s priorities was working with the Department of Education to improve skills in the sector and prevent cybercrime.

Gauteng economic development MEC Qedani Mahlangu said public and private sector partnership were vital to meeting the challenges. “We must work with the private sector and communicate with telecommunications as government as well as partner with business in this matter,” Ms Mahlangu said.

Chris Lazarus, managing executive at Vodacom Commerical Development, said improving broadband access would raise more than just business prospects.

“There is a clear link between communities and what the internet provides,” he said.

“If we don’t take advantage of that I think we will be cut out of the global broadband picture.” With Khulekani Magubane