Internet as important as agriculture to SA economy

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Internet use in emerging markets is exploding. In a country like South Africa for instance there are now 60% more internet users than there were two years ago.

That growth is good for the economy. In fact, it’s so good that the online sector contributes up to two percent (or US$7.1 billion) of the South Africa’s GDP.

According to a new collaborative study by internet research company World Wide Worx and Google, the internet that puts it in the same league as Agriculture (2.1%) and Utilities — Electricity, Gas and Water (2.6%).

The online economy is also growing much faster than the offline one. In fact it could account for 2.5% of GDP by 2015. Not bad for a country that only has an estimated 8.5-million internet users out of a 50-million strong population.

If you think it’s big tech companies that are going to see the biggest benefits of this boost to the economy, think again. The study suggests that Small and Medium-sized Enterprises (SMEs) will gain most.

In fact, it found that SMEs with a website are almost three times more profitable than those without. Moreover approximately 20% of all small businesses surveyed revealed that they would not be able to survive without an online presence. With SMEs accounting for about 7.8-million jobs in the country, as many as 1.56-million jobs would be in jeopardy if not for the internet.

Thing is, things could be much better. At the moment, 17% of the country’s population access the internet. Although that number is likely to rise as smartphones come down in price, the country still lags behind some of the continent’s biggest internet users such as Kenya (25%), Egypt (26%), Nigeria (29%) and Morocco (49%).

The study reckons that the South African government needs to put the internet at the heart of its policies in order to avoid being left behind by other countries. Some of the ways it could do this include:

  • Investing in broadband infrastructure and putting in place policies to enable last-mile access by the private sector.
  • Unblocking regulatory challenges around right of way permits.
  • Taking a proactive approach with regards to reallocating unused spectrum.
  • And making e-governance a reality by putting government services online; encouraging SMEs to have a strong presence online.
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