Digital platforms posed to inject R91.4 billion into South Africa’s economy

Formulating a pathway to prosperity, a groundbreaking new report by Naspers and the Mapungubwe Institute for Strategic Reflection (MISTRA) paints an exciting image for South Africa’s future when it comes to an efficient digital economy.

The report titled “Our Digital Horizon” unpacks immense potential of South Africa’s digital platform economy.

The report emerges during a momentous period in which South Africa celebrates 30 years of democracy, as it encapsulates a unique transformative journey where the country grapples with far-reaching political economic, and technological changes.

This sector, encompassing online marketplaces, e-commerce platforms, and ride-hailing apps, could inject a staggering R91.4 billion into the economy by 2035.

This translates to a significant boost, expanding the sector’s contribution to GDP from a palatable 0.02% to a substantial 1.38%.

Game-changing economic growth

A first of its kind the research hunts to comprehensively analyze the economic impact of South Africa’s digital platform sector.

It highlights the transformative potential of these platforms, paving the way for a more prosperous future.

The report also identifies several key roadblocks hindering this growth:

1. Slow pace of digital transformation: Compared to other countries, South Africa lags behind in embracing digital technologies. Businesses and government need to collaborate to accelerate digitalization efforts.
2. Digital skills gap: The demand for digital skills, such as programming and data analysis, is outpacing the supply of qualified workers. Boosting STEM education and aligning training programs with industry needs are crucial steps to bridge this gap.
3. Infrastructure hurdles: High mobile data costs and limited access to high-speed internet infrastructure create significant barriers. Expanding digital infrastructure and prioritizing it in development plans are essential.
4. Outdated regulations: Restrictive regulations can stifle innovation in the nascent digital platform sector. Regulatory sandboxes and adapting regulations to the evolving landscape are necessary to foster growth.
   
   
5. Digital divide: Limited access to digital technologies in rural and underserved areas excludes many from participating in the digital economy. Expanding access and promoting digital inclusion are crucial to ensure equitable participation.

Collaboration remains key to unlocking rewarding potential

The report emphasizes the importance of a collaborative approach. Businesses, government, and civil society need to work together to address these challenges and create an enabling environment for digital platforms to thrive. By implementing the report’s recommendations, South Africa can unlock significant economic benefits:

An expansion of the digital platform market: This growth will foster the creation of new platforms and empower existing ones, creating a robust digital ecosystem.

Job creation and economic empowerment: The digital platform economy presents opportunities for jobs across various sectors, from technology to logistics.

Enhanced social protection: The growth of the digital platform economy can lead to better social safety nets and greater support for gig workers.

Naspers: An effort to lead the way in digital transformation 

Naspers, an arguably leading technology investor in South Africa, continues to play a key role in driving digital transformation.

Their South African entities, such as Takealot and Mr D, have already made significant contributions to the economy.

Phuthi Mahanyele-Dabengwa, CEO of Naspers South Africa, while speaking at the conference said the report sought to highlight their commitment to leading this transformation and fostering inclusive growth.

Report key findings

• A key finding was that between 2010 and 2022, the world’s top 20 companies had shifted from being resource-driven (36% to 7%) to being dominated by digital platforms (16% to 56%).
• Another insightful key finding pointed to STEM graduates in South Africa accounting for only 18% of the total, compared to over 30% in innovation leader countries such as India, the UAE, and South Korea.
• Mobile data costs in South Africa remain the highest, surpassing other markets such as Nigeria, Namibia, and Kenya.
• The report also highlighted how it took up to 180 working days to process certain regulatory approvals which hampered timely access to digital infrastructure and services.
• This revelation came alongside the finding that SMEs contributed 30% to 40% of GDP. In townships and rural areas, SME’s are money informal and needed focus on competitive products and even digital services.

The future ahead

South Africa stands at the precipice of a digital revolution. The “Our Digital Horizon” report provides a roadmap for unlocking the immense potential of the digital platform economy. By embracing collaboration, innovation, and overcoming challenges, South Africa can step into a future powered by digital inclusion and shared prosperity.

The future of South Africa’s economy is intertwined with its digital transformation.

While there are challenges to overcome, the potential for growth through digital platforms is undeniable. By working together and fostering a supportive environment, South Africa can harness the power of digital technologies to create a more prosperous and inclusive future for all its citizens.

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