South Africa’s digital economy is projected to reach nearly 20% of GDP by 2028, with advancements in digital services − such as fintech, e-health and digital education − transforming access to essential services and economic resilience.
This is one of the key takeaways from the latest GSMA South Africa Digital Economy report, which reveals how mobile and digital services are accelerating economic growth and advancing social progress, fostering opportunity and promoting inclusivity across the country.
Statista notes SA’s GDP in 2024 stands at $374 billion (R6.7 trillion), meaning the digital economy will contribute R1.34 trillion by 2028, per the GSMA’s projections.
According to the report, digital transformation is expected to play a pivotal role in SA’s future, with projections indicating it could contribute nearly 20% to national GDP by 2028, create 300 000 jobs, and expand access to essential services for millions.
The GSMA notes SA has made significant progress in developing its digital economy in recent years. On measures of connectivity, adoption, digital penetration and digital skills, the country stands far ahead of the rest of Sub-Saharan Africa on most measures of digital economy performance.
However, it points out: “On such broad measures, SA is not performing well compared to BRICS and other middle-income countries. It ranks in the bottom quartile of a list of 64 more advanced countries and at the bottom of the BRICS group of countries, although a recent decline in the ranking of Brazil has placed it just one position above South Africa.”
Overall digital competitiveness is a measure of how a country is performing on a broad range of metrics reflecting the level of digital development, the GSMA explains.
Angela Wamola, head of Sub-Saharan Africa at the GSMA, says: “Digital transformation in SA holds tremendous potential to enrich lives, enhance economic resilience and foster greater inclusion.
“By harnessing the power of mobile and digital services, we can open up meaningful opportunities, particularly for rural communities, empowering them to participate fully in the nation’s digital future.”
Mobile motivation
As digital adoption accelerates, the GSMA believes the demand for digital skills will increase significantly. It says youth employment opportunities in tech-driven sectors are expected to rise, emphasising the need for comprehensive digital skills programmes to bridge workforce gaps.
It points out that telecommunications operators are the foundation of SA’s digital economy. According to the industry body, the telcos generate around R200 billion per year in revenue and account for 4% to 5% of the country’s total GDP.
“They generate 3% to 4% of the total tax revenue collected by government and are responsible for about 30 000 jobs. But telecoms services account for only around one-third of the total digital economy, which accounts for 10% to 15% of total GDP.
“Digital plays an even more important role in driving growth in the overall economy. SA is a regional hub for investment in new technologies, such as cloud computing and artificial intelligence.
“These technologies are reducing costs and driving productivity growth among South African organisations, including micro, small and medium enterprises that are critical generators of jobs and wealth. Digital technologies are having a similar impact on critical sectors of the South African economy, such as mining, agriculture, manufacturing and transport.”
Although the majority of players in the digital economy are from the private sector, the GSMA notes government plays an essential role in its future growth.
It says the transition to digital channels for delivering public services is an important driver of digital adoption.
“Similarly, strengthening the teaching of digital skills at all levels of the education system is essential for the future development of the sector. The mobile operators are critical players at the heart of the digital economy. They generated R120 billion in revenue in 2023, 58% of the total telecommunications sector revenue, and invest an average of R15 billion per year.
“On a per capita basis, South African mobile network operators invest more than operators in other BRICS countries and have achieved almost universal 4G population coverage. However, more investment will be needed to match 5G coverage and rising broadband speeds in other middle-income countries.”
According to the GSMA, SA’s fintech sector, a regional powerhouse, is forecast to generate annual revenue of approximately R8.2 billion by 2024. With innovations in digital payments and financial tools, it says, fintech enhances financial inclusion, particularly for micro and small enterprises.
Persistent connectivity gaps
Commenting on the report, communications minister Solly Malatsi says the mobile industry’s contribution to SA’s GDP is set to grow, as mobile penetration deepens, with smart devices and more South Africans, particularly in rural areas, gaining access to mobile broadband.
“However, despite this progress, there are still significant gaps in access to affordable and reliable connectivity, particularly in rural and underserved areas. While mobile broadband penetration has reached 85% in urban areas, only 56% of rural South Africans have access to mobile internet,” says Malatsi.
He points out that these disparities create a digital divide that limits the ability of millions of South Africans to access the benefits of connectivity, such as online education, e-commerce, mobile banking and government services.
“It is crucial that we address these gaps. Access to mobile networks and affordable data is not a luxury – it is a necessity for SA’s socio-economic development. Without increased investment in expanding mobile infrastructure, we risk leaving behind large segments of our population, particularly in rural areas, who would otherwise benefit from the opportunities technology can provide.
“The good news is that mobile networks have proven to be one of the most cost-effective ways to bridge the digital divide. In SA, mobile technologies have been crucial in connecting people in even the most remote areas.
“However, to fully leverage this potential, we must ensure mobile operators, investors and innovators have the right regulatory environment and incentives to continue investing in infrastructure.”
Share