Data prices must fall or South Africa will miss R91-billion boom

Naspers and the Mapungubwe Institute for Strategic Reflection (MISTRA) anticipate that digital platforms could contribute up to R91.4 billion to the South African economy by 2035.

However, to unlock the promise of the digital platform economy, it is critical that the country expands access to high-speed Internet, reduces data prices, establishes advanced data centres, and stabilises its power supply.

This is according to the partnership’s Our Digital Horizon research report, which it launched on Tuesday, 27 August 2024.

The anticipated growth of digital platforms in South Africa over the next 11 years will significantly increase its contribution to the economy to 1.38%, up from 0.02% in 2022.

“The findings are promising, projecting that the digital platform sector could contribute as much as R91.4 billion to our economy by 2035,” the report says.

“This impact includes a cumulative tax contribution of R10.7 billion and the creation of over 341,000 and 157,000 full-time equivalent jobs, based on monthly earnings of R12,000 and R26,000, respectively.”

According to the report, South Africa can benefit significantly from harnessing untapped digital opportunities in sectors like gaming and the informal economy and expanding services to underserved communities.

However, more South Africans will need access to high-speed Internet and a reliable power supply to benefit from these.

To this end, the report notes that South Africa currently has around 45 million Internet users, translating to around 74% Internet penetration.

At the same time, 91% of the population owns smartphones and spends as much as four hours daily browsing the Internet.

“The local platform economy in South Africa has witnessed rapid growth in recent years, driven by increasing internet penetration and smartphone adoption,” it says.

“High-speed internet, advanced data centres, and reliable power supply are essential for leveraging AI’s full potential and advancing digital transformation.”

The report recommends that digital platform providers establish public-private partnerships like SA Connect to expand Internet access and digital infrastructure nationwide through fibre-optic networks and 5G connectivity.

This includes reducing the cost of data in South Africa to make it more accessible to lower-income earners.

“The average cost of 1GB of mobile data in South Africa is around $1.81 (R33.21), which places the country among the more expensive as compared to other markets like Nigeria, Namibia and Kenya,” the report says.

MyBroadband recently used Cable.co.uk’s mobile data price data to compare the cost of 1GB of data in South Africa to other nations on the African continent.

The research firm analysed mobile data costs across 5,600 plans in 237 nations between June and September 2023. Its analysis included 57 African countries.

Only 19 of the 57 countries compared are more expensive per GB of mobile data than South Africa.

South Africa’s average price of $1.81 (R33.21) per GB of data compares reasonably well to the African mean of R66.86 per GB. However, countries like Zimbabwe, Saint Helena, and South Sudan significantly push up this average.

Compared to the median price of R23.16 across all African nations compared, South Africa’s price is more than R10 more expensive per GB on average.

For reference, Malawi’s data prices are the most affordable of the African countries compared at $0.38 (R6.98) per GB, meaning South Africa’s pricing is nearly five times more expensive.

South Africa’s newly appointed communications minister, Solly Malatsi, has called for data prices to fall in the country. He said the data costs should not burden consumers, and lowering them will help boost accessibility in the country.

Only 14.5% of South Africans can access the Internet at home or through a fixed line. However, South Africa’s mobile network coverage means that around 78.6% of residents have access to mobile Internet.

Unfortunately, the high price of mobile data in South Africa makes access to the Internet difficult for many residents.