Telecoms adds 7% to GDP

By Damaria Senne, ITWeb senior journalist

Johannesburg, 15 Dec 2006

The South African telecommunications industry is thriving. It contributed over 7% to SA's gross domestic product (GDP), which grew 4.6%, to just over $239.5 billion last year, says an Oxford Business Group report.

The 230-page "Emerging South Africa 2006" report provides overviews and analyses of SA's political and macro-economic environment. It also reviews trends and events in all major economic sectors.

Speaking at the launch of the report yesterday, Oxford Business Group editorial manager Garrick Long said part of the growth in the telecoms industry can be attributed to good infrastructure.

"Beyond its business environment, SA benefits from a robust, world-class infrastructure - boosted by a modern transport system, low-cost and widely available energy, and sophisticated telecoms facilities," he said.

Competition is also being introduced in the telecoms sector and certain service sectors to ensure the country remains competitive internationally, while taking into account domestic economic concerns such as unemployment, he noted.

Growth and trends

According to the report, SA's IT industry growth outstrips the world's average, returning to levels previously attained in the 1990s when many companies spent heavily on Y2K upgrades and the dot-com boom was in full swing.

Expenditure on IT upgrades in 2006 will grow by 7% to 10%, excluding telecoms spend, the report says.

Part of the growth results from SA's ability to work creatively within the constraints of the local infrastructure, resulting in the development of products and services that have application in less developed countries.

SA's popularity as headquarters for the African operations of many organisations also contributes to growth in the IT sector.

"While many of these global companies bring their own IT systems, freezing out local equivalents, they do also bring a level of expertise and technologies that sets the standard for other firms to follow," says the report.

It also notes the shortage of skills in the ICT industry is still of particular concern, with analysts estimating SA will need 3 000 to 6 000 more civil engineers, IT professionals and technicians for all of the planned infrastructure projects.

It cites a Cisco survey which notes that SA's skilled networking staff is 19.5% below what the country needs to deploy enhanced ICT networks. This shortfall is forecast to increase to 24.1% by 2009, it says.

Oxford Business Group produced the report in partnership with the Department of Trade and Industry.