IT, telecoms gateway to Africa
29 April 2003
South Africa's information and communication technology (ICT) sector emerged from 2002 with not only its reputation intact, but also its bottom line, according to an authoritative new report.
Of 40 ICT and electronics companies that reported results for 2002, 77% reflected an operating profit - and according to the Map of the Information and Telecommunications Technology Sector in South Africa 2003 (MITTS SA), it is expected that this proportion will be closer to 90% for the current year.
The report found that in many ICT sub-sectors in South Africa, the adoption of technology is as sophisticated as that found anywhere in the world. (See also "South African ICT innovations" below)
It also confirmed that South Africa is becoming the ICT gateway to Africa, with an increasing number of local companies expanding into southern, East and West Africa, and many multinational companies that market in Africa choosing to base their regional offices - typically overseeing the Middle East and Africa region - in South Africa.
Another positive trend to emerge from the research is increasing willingness of local ICT companies to tackle developed markets such as Europe and the US.
Says ICT analyst Bruce Conradie, who led the research, "South African IT players are increasingly eyeing these markets, and their sense of self-belief is growing. More and more local companies know they can play on the same field as the best in the world, and are going offshore."
- See the list of South African ICT company success stories on the Cape IT Initiative website.
"In a market that has seen a global downturn in sales, South Africa's top ICT companies have seen a hefty growth in turnover for the past two years running", independent technology research organisation World Wide Worx, which commissioned the report, says on its website.
The 40 companies included in the MITTS SA survey reported R67-billion in sales for 2000, a 31% increase to R88-billion in 2001, and a further 21% jump to R107-billion in 2002.
"These numbers are no secret", says World Wide Worx MD Arthur Goldstuck. "But market sentiment around ICT has been so negative since the tech stock crash of 2000, everyone has been focusing on the bad news."
The good news is that South Africa's mainstream ICT sector is broadly healthy and profitable.
"There is no question that it is not as profitable as a few years earlier, but there is no indication of a sector that is collapsing, despite share prices plunging", says Goldstuck. "In other words, market sentiment has killed off IT shares, but not IT companies."
On the negative side
The report does include negative findings, among them that telecommunications
policy and the Telkom monopoly are hindering the development of the sector and the diffusion of ICT into key economic sectors in the country.
Skills also continue to be in short supply in the country, and skills development has accordingly become a priority for the future of ICT in South Africa.
Overall, however, the 258-page report paints a more positive picture for the South African ICT landscape than has been observed for international markets.
"The 115 company profiles in the report also underline the fact that those companies that continue to make losses or go out of business will represent a weeding out of the weaker performers, and a strengthening of the proverbial gene pool of ICT companies in South Africa", says Goldstuck.
The MITTS SA 2003 study was produced by Conradie, Goldstuck, Jonathan Miller and Philip Esselaar (partners in ICT consultancy Miller, Esselaar, and Associates) and various ICT journalists. The full report can be purchased from World Wide Worx.
South African ICT innovations
While the MITTS SA report finds that the adoption of technology, in many ICT sub-sectors in South Africa, is as sophisticated as that found anywhere in the world, there is separate evidence that the country is a serious ICT innovator in its own right.
The South African Technology Vanguard (Savant), a recently launched partnership between the government and key industry players, argues that while South Africa is firmly part of the technology mainstream, applying the world's best technology and keeping pace with progress in the industry, the country simultaneously adapts and applies these technologies to the local market.
Savant supports this argument with an impressive - though far from exhaustive - list of South African ICT innovations:
Standard Bank, one of the country's "big four" commercial lenders, was the first in the world to enable the online transfer of funds from mortgage bonds, using clients' homes as collateral. The bank was also one of the first two in the world to link mainframe computers in disparate sites, allowing customers nationwide access to their cheque accounts.
MTN was the first South African cellphone service provider to launch pre-paid cellular, offering customers a cellular service with no contracts and no credit checks. MTN was also first to provide an SMS service as a transmission medium for tracking operations (telemetry) and, more recently, was the first to showcase mobile coin-less vending, where instant verification via cellular phone results in the dispensing of consumer goods.
Amplats was the first organisation worldwide to implement a full-scale SAP production environment running Windows NT.
United Building Society (now Absa) was the first institution in the world to use IMS Fastpath, simplifying banking transactions and processing a record number of transactions per second. Following this, Absa Bank was among the first three institutions in the world to run an IBM Sysplex using IMS Fastpath.
Volkskas (now Absa) was the first bank in the world to implement remote network management to stabilise its network and obtain predictable response times, and Allied (now Absa) was one of the first institutions in the world to use FBSS for teller transactions in an IMS environment.
Multichoice was the first company in the world to broadcast digital television using MPEG2 and DVB standards with an integrated conditional access system. This company was, incidentally, the second in the world to launch satellite TV.
Telkom played a leading role - investing an estimated US$85-million - in the West Africa Submarine Cable/ Southern Africa Far East submarine cable system initiative, which involved 36 telecommunication operators from 31 countries, most of them African states. The initiative supports the continent's growing telecommunications needs and cheaper international connectivity, and will plough much of its generated revenue back into Africa.
SouthAfrica.info reporter
