Growth spurt for online economy

According to a maiden study, “Internet Matters: The Quiet Engine of the South African Economy“, the sector’s contribution to the country’s gross domestic product (GDP) is rising by about 0.1% each year and it has the potential to become a major economic growth engine.

The study, released this week by World Wide Worx, an independent technology research and strategy organisation, was commissioned by Google South Africa and is the first in-depth analysis of the local internet economy.

Consumers, small and medium enterprises and the government spent a total of R59-billion last year on products and services through the internet, as well as on internet access and infrastructure. Government spending on infrastructure and access accounted for just over  R1-billion of this amount.

Putting this in context, the agricultural sector accounted for only 2.2% of GDP in the last quarter of 2011.

“It is likely that, over the next five years, the internet economy will begin approaching the size of the construction sector, an estimated R120-billion in 2011,” said Arthur Goldstuck, managing director of World Wide Worx.

The investment in bre and other data infrastructure by the cellphone networks amounted to R13.5-billion, but it was far surpassed by the amount spent on internet presence and access – R29.2-billion.

E-commerce is also growing at a rate of about 30% a year. Airline e-ticketing is a notable presence in this market and online sales totalled close to R9-billion last year.

Research showed that 410 000 small and medium-sized businesses in South Africa had a website, representing 63% of active formal enterprises. An estimated 150 000 businesses, accounting for about 1.5-million jobs, would not be able to survive without their web presence.

The research indicated that 40-million South Africans used phones – a large percentage of which are smartphones – which represents the future potential of internet growth.

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