Internet only contributes 2% to SA economy

Johannesburg - Internet businesses’ contribution to the South African economy is lagging far behind that of developed and even other developing nations, according to a study.

Global body, the Internet Society, has this week released a report that focuses on internet development and internet governance in Africa.

The Internet Society describes itself as an independent source of leadership for internet policy, technology standards, and future development.

And its latest study highlights that the average contribution of the internet economy to gross domestic product (GDP) in the most advanced economies in the world in 2010 was 4.1% and that this was expected to grow to 5.3% by 2016.

Meanwhile, for all developing markets this figure was 3.6% and is expected to grow to 4.9% by 2016, according to the Internet Society.

South Africa, though, lags behind both advanced developed and developing countries in this regard, the study indicates.

“By comparison, the average contribution for South Africa, for instance, was 1.9% in 2010, 2% in 2011 and is expected to be 2.5% by 2016,” reads the study.

The study, though, does say that Africa in general is lagging when it comes to its internet economy.

The report says that the internet contributes $18bn (1.1%) to the African GDP.

“Internet business communities are growing in Africa, albeit not as extensively as those in high-income markets such as Europe or North America,” reads the report.

“As such, Africa’s Internet economy as a proportion of GDP still lags leading industrialised nations,” the report says.

SA's ICT weakness

It’s not the first time that South Africa, in particular, has been portrayed as having a weak digital economy when compared to the rest of the world.

South Africa slipped five places to 75th on the World Economic Forum (WEF) Networked Readiness Index (NRI) for this year. The ranking measures 143 economies in terms of their capacity to prepare for, use and leverage ICTs and South Africa is third on the continent behind Mauritius (45) and the Seychelles (74).

The WEF report said that while South Africa’s overall political and business environment remains one of its strengths, the country’s “general state of ICT readiness remains very low (102nd)” and that SA is dogged by “poor quality of ICT-related infrastructure (85th), notably the limited international internet bandwidth (128th)”.

Late last year, Fin24 also reported on how South Africa fell from position 89 in 2012 to 90 in 2013 on the International Telecommunication Union (ITU) ‘ICT Development Index’ (IDI).

This was according to the ITU’s 2014 Measuring the Information Society (MIS) Report, which ranks 166 countries on their technology performance in areas such as ICT infrastructure, access, use and skills.

“South Africa, with an IDI value of 4.42, falls just below the global average, but together with Cape Verde and Botswana achieves a higher value than the developing-country average (3.84) in the IDI 2013,” said the ITU at the time.

User numbers

The Internet Society’s report released this week also provides other details on South Africa online economy.

When it comes to internet usage, South Africa ranks high on the African continent.

“If we consider the percentage of individuals using the Internet, Morocco stands first at 56%, followed by Egypt at 50%, and South Africa at 49%,” reads the report.

South Africa’s total population numbers 52 million according to World Bank data. This means then that South Africa has approximately 25.48 million internet users when considering the Internet Society’s research.

In comparison, the Internet Society says that “several sub-Saharan African nations are still below 2% internet penetration”.

Do you think that South Africa is on the right or wrong track regarding its internet economy? What more can be done to boost the local internet economy? Tell us by clicking here.

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