ICT spending ‘to exceed $26bn in South Africa’s digital transformation’

Technology research and consulting services firm the International Data Corporation (IDC) said “the emergence of the internet of things (IoT) ecosystem... is a key facet of the digital transformation revolution beginning to take place in South Africa”.

IoT applications in government, retail, transportation, manufacturing and utilities “will offer the greatest growth opportunity for vendors operating in South Africa, while security is expected to form a key component of any robust digital transformation strategy”, IDC said.

IDC research manager for software and IT services in Africa Lise Hagen said: “Some combinations of the technologies of the third platform, namely mobility, cloud, big data analytics, and social business, sit at the heart of most digital transformation efforts across South Africa.”

Hagen said cities in major provinces such as Gauteng, Western Cape, and KwaZulu-Natal “have engaged in ‘smart city’ transformation activities in order to improve the quality of life of citizens, enhance the experience of businesses, and provide an environment conducive to economic development”. The success of smart city initiatives “will be central to South Africa's digital transformation journey in 2016”, Hagen said.

However, IDC said “the poor level of infrastructure, particularly in relation to electricity supply”, is a “key challenge” for firms trying to develop networks in Africa.

The director of IDC’s telecoms programme for the Middle East, Africa and Turkey Paul Black said: “This issue has consistently affected the profitability of telcos due to the increased levels of capital and operational expenditure they must undertake in building and maintaining a passive telecom infrastructure. Some global telcos have also failed to adapt and implement strategies that have succeeded in other regions. Indeed, the majority of global telcos have been unable to localise their global strategies to suit the unique operating environments of the African market."

Operational challenges have nonetheless “driven growth in the continent's third-party telecommunications infrastructure management business”, Black said.

To “increase the likelihood of success”, Black said telecoms firms looking to expand in Africa “must focus on developing enterprise products and services that appeal directly to the wants and needs of the local market, and to small and medium-sized businesses in particular”.

Black said: “Telcos looking to enter Africa should tailor strategies that have succeeded in other regions to the specific operating environments they encounter in Africa, while the mobile virtual network operator (MVNO) route should also be considered as a potential entry strategy."

Research published in November 2015 by market analysts Ovum projected that the number of mobile broadband connections in Africa would reach one billion in 2020, up from 147 million at the end of 2014.

Ovum said the growth of mobile broadband in Africa over the next few years "will be driven by factors such as the ongoing rollout of 3G W-CDMA (wideband code division multiple access) and 4G LTE (long term evolution) networks on the continent and the increasing affordability of smartphones and other data devices".

According to the African Union (104-page / 1.53 MB PDF) access to advanced ICT is “critical to the long-term economic and social development” of the continent. “It has increasingly become essential that appropriate ICT infrastructure, applications and skills are in place and accessible to the population to close the development gap between Africa and the rest of the world,” the plan said.