Tech sector holds growth opportunity for SA

1st October 2004 By: Deborah Spicer

The potential of the information-technology (IT) sector is becoming widely recognised by analysts and policymakers alike. In a recently-released study by BMI TechKnowledge Group (BMI-T), thetechnology sector in South Africa is revealed to be remarkably consistent and robust, despite its proportionately small size.

Findings from the study, commissioned by Microsoft South Africa, support predictions that software and services growth is on the cards for the local IT sector. Between 1998 and 2003, the IT industry growth in terms of each gross domestic product (GDP) was a surprising 11% which outpaced the growth of South Africa’s broader economy during thisperiod. The South African economy grew by 1,9% in 2003. The South African IT industry is also projected to grow at compound annual growth rate of 8,5% between 2003 and 2008, holding great opportunity for business and government.

“The results reflect the position of South Africa versus other countries, given the differenteconomic maturity and social variation between regions. “The research company is confident that the data are a solid representation of the contribution made by the technology sector to the South African economy,” says director Mark Walker.

As the South African research partner of IDC International, BMI-T used econometric method-ology proved in the Canadian and Australian market, and adapted for South African conditions, to explore the expenditure impact of Microsoft South Africa and its partner companies.

In the analysis of IT spending, job creation, tax revenues, and company revenues related to IT investments, the study found that Microsoft contributed R9,6-billion to the South African economy in calendar year 2003. With the South African GDP at R1,2-trillion for 2003 (according to Statistics SA), this translates into a 0,8% contribution to GDP. This contribution is significant, given the fact that the South African economy is largely based on primary industry. Translated into a human factor, the number of IT industry jobs grew by a compound average growth rate of 14,37 per cent between 1995 and 2003. As a whole, the South African IT industry employs approximately 62 100 people. Microsoft-related employment accounts for approximately25 995 of the 62 100 IT employees in SouthAfrica.

“Our industry, like our economy, has matured,” says Microsoft South Africa MD Gordon Frazer. “In a developing country, like South Africa, IT is increasingly assuming a strategic role in that it has the potential to fuel economic growth within our national economies. “Moreover as our economy continues to mature and become more service oriented, IT will contri-bute more to the overall GDP and more to thecreation of high-skill, high-wage jobs.”