Overall IT spending in South Africa increased 7.1% year on year in 2011 to total $12.91 billion, according to the latest figures released today by IDC, the premier global provider of market intelligence, advisory services, and events for the information technology, telecommunications, and consumer technology markets. IDC's study reveals that advances in mobile communications and technology resulted in high levels of consumer spending on PCs and smartphones in 2011, with the home sector recording the largest share of total IT expenditure in the country, at 20%.
"The growing availability of wired and wireless access, along with decreasing communications costs, is driving sales of notebooks, netbooks, tablets, and smart handheld devices among consumers, while egovernment policies are propelling IT spending by various government departments as they seek to automate their processes," says Jebin George, a senior research analyst at IDC Middle East, Africa, and Turkey.
Joining the home and public sectors as South Africa's leading verticals are the combined transport, communications, and utilities vertical and the combined finance industry, with these four verticals together accounting for 72.6% of total IT spending in the country in 2011. Much of the spending in the communications vertical pertained to infrastructure upgrades related to undersea cables and broadband networks, while increased back-office automation to counter competition and support new channels was responsible for driving spending in the finance vertical.
According to IDC, the key themes of IT investment remain operational efficiency, cost optimization, innovation, and customer centricity. While consumers, government entities, and large corporations in the communications, finance, and manufacturing sectors remain the country's biggest investors in IT, opportunities for significant growth exist in the fast-growing SMB segment, with such businesses dominating South Africa's business services vertical, especially in the IT, tourism, and real estate sectors. The government's plan to develop the SMB segment as part of its Accelerated and Shared Growth Initiative (AsgiSA) is expected to give a further impetus to spending in this vertical.
Increasing IT spending by government entities, businesses, and consumers is being boosted by a growing population, increasing middle-class wealth, and continuing infrastructure expansion, thus making South Africa a more attractive market for IT vendors. "South Africa is at the forefront of the growth currently being seen in the African continent's middle-class population, especially with its Black Economic Empowerment (BEE) program," says George. "In line with this, we expect to see a surge in demand for products and services across verticals, as a large percentage of South Africa's low-income population becomes wealthier, which will bring significant advantages to the economy and result in increased IT investment."
Looking ahead, overall IT spending in South Africa will steadily rise at a compound annual growth rate (CAGR) of 6.2% over the coming years to reach $17.42 billion in 2016. Government will constitute the fastest-growing vertical during this period, with IT investment expanding at a CAGR of 11.6% through 2016. Government, transport, communications, and utilities will remain the biggest-spending verticals, while from a technology perspective, investment growth will be strongest in software and IT services.
IDC's South Africa Vertical Markets 2012–2016 IT Spending Forecast provides a detailed overview of IT spending trends and forecasts for 17 vertical markets and 10 product categories, including hardware, packaged software, and services in South Africa. The study includes an overview of key industry developments, industry challenges, vertical-specific IT drivers and trends, and tables detailing IT spending by vertical market for each product for the period 2011–2016. Analysis is based on continuous research and monitoring of users' IT spending, emerging purchasing patterns, and supply and demand-side research.
