E-commerce set to add over R91bn to SA economy by 2035 — report

A report by Naspers and the Mapungubwe Institute for Strategic Reflection (Mistra), released on Tuesday, projects that e-commerce could contribute R91.4-billion to South Africa’s economy by 2035.

The digital platform economy’s input to South Africa’s GDP is expected to increase from 0.02% in 2022 to 1.38% by 2035, fuelled by a stable macroeconomic climate, the proliferation of smartphones and fixed broadband, and the growing adoption of electronic transactions. However, South Africa has yet to fully reap the rewards of this digital economy, despite the emergence of digital platform startups across various sectors and technologies in recent years.

South Africa, alongside Kenya and Nigeria, is a leading digital platform market in Africa, serving as a hub for innovators and investors, as well as a gateway to the continent for key global players, notes the report, titled “Our Digital Horizon: The economic opportunity of digital platform businesses in SA”.

Despite lagging behind other developing nations in digital readiness, South Africa has witnessed a surge in platform activity fuelled by adaptable customers and supportive factors, although it isn’t fully exploiting its potential, the researchers note, highlighting that limited income, skills gaps and scarce venture capital restrict platform growth to niche markets in urban areas.

While some categories, like classifieds and accommodation, see broad adoption, e-commerce and fintech face difficulties because of income levels and market limitations. Still, these sectors and on-demand services are growing. Importantly, digital platforms boost competition and social impact in agriculture, healthcare and education, attracting venture capital investment.

Naspers, which owns the Media24 media group, entertainment company MultiChoice, food delivery service Mr D and the country’s biggest online retailer, Takealot among others, says its entities in South Africa have already made substantial contributions to the economy by generating more than R13-billion in economic value, including R1.5-billion in household income (based on 2022 data).

Reshaping the economy

Joel Netshitenzhe, Mistra’s executive director, said digital platforms were reshaping various sectors of the economy.

“Businesses that were constrained by market access can now be discovered globally on digital platforms. Emerging farmers can access inputs, funding, extension services and markets on a single platform. The possibilities are limitless.

“However, as this report illustrates, the way in which productivity improvement benefits of digital platforms are accounted for in the respective digitalising sectors and the broader economy requires further scrutiny.”

Phuthi Mahanyele-Dabengwa, the CEO of Naspers South Africa, called the report a “pivotal moment” for South Africa, as it stands on the brink of a digital revolution.

“Though still in its early stages, the shift to digital mirrors global trends and offers a rare chance to unlock significant economic potential for our nation,” said Mahanyele-Dabengwa.

Trade, Industry and Competition Minister Parks Tau welcomed the launch of the report, saying it served as a “springboard for fostering necessary exchange and collaboration between business and the public sector, which is required to extract maximum value of the digital platform economy for all South Africans.

“This is important research since the digital economy is an important global driver of economic growth, innovation and improved service delivery.”

Tau, citing World Bank data, said that by 2026 the contribution of the digital economy was expected to be a quarter of global GDP.

“It should be noted that the [information and communications technology] sector is outperforming several sectors in South Africa and already contributes around 17% of service exports and close to 3% of GDP.”

Tau said the demand for digital skills was growing and infrastructure was key to unlocking the promise of the digital platform economy and AI.

“Regulations need to be alive to the nascent nature of the South African digital platform sector and digital platforms to play a bigger role in economic inclusion and social protection.

“As a country, we will only be amongst the leaders in the digital economy space by fostering a conducive policy environment, promoting collaboration, and incentivising investment in innovation to harness the transformative potential of our manufacturing sector to drive sustained economic growth and foster job creation,” said Tau.

The global ecommerce market is set to reach a revenue of $4,117-billion in 2024, with an annual growth rate of 9.49% expected to increase it to $6,478-billion by 2029, according to data from Statista. China leads the market with a projected revenue of $1,469-billion this year.

The number of users is expected to grow to 3.6 billion by 2029, with user penetration reaching 49.1%, up from 40.5% in 2024. Average revenue per user is estimated to be $1,620. DM