Local ICT sector grows 7% despite load shedding

The South African information and communication technology (ICT) sector grew 7% in the last financial year, despite the challenges brought about by load shedding. This result comes from the local market research firm, BMIT, which published the findings in its South Africa ICT Market Sizing and Overview report.

According to the report, growth was uneven across different market segments – some saw a decline while others saw exceptional growth. Overall, the local economy grew by just 2% but the ICT sector grew by more than three times that. This highlights the important role that ICT services play in local and international business.

According to BMIT’s managing director, Chris Geerdts, the ICT industry’s performance would have been far better if it had not been for load shedding. It impacted the reliability of ICT service delivery and drove up costs as service providers had to invest in inverter systems or diesel generators.

Obviously, the ICT sector is not the only one to be heavily impacted by power cuts – almost every facet of life and work has been affected. The South African Reserve Bank estimates that the country loses about R900 million every day as a result of rolling blackouts.

How the ICT sector grew despite load shedding

According to BMIT, most of the 7% growth can be attributed to the IT software and services sector – notably the public cloud services sector, which has shown an increase in revenue by almost 40% year of year for the last two years running. The company estimates the cloud services sector to grow at a CAGR of over 12% until 2027.

Geerdts says that cloud solutions allow companies to ensure continuity through global disasters and the ongoing problem of power cuts. This is why many enterprises have adopted a cloud-first approach to business.

Despite this growth, local ICT service providers are still feeling the pressure as a result of load shedding as it has increased the overall downtime of the connections that companies need to access the cloud and their digital ecosystems.

Connectivity also shows positive growth

According to the BMIT report, revenue growth in the telecoms sector stood at 2.6% year-on-year. Load shedding played an evident role in this sector, where companies require robust and reliable connections for their operations and business applications.

In this regard, business connectivity has been a driving force behind the growth of this sector. In addition, the affordability of broadband connectivity has enticed companies away from fixed data bundles. The fibre-to-the-home segment was a large driver of growth in the connectivity sector, possibly due to the ongoing remote work trend.

Challenges faced in the ICT sector

While cloud services account for the majority of the ICT sector growth, some sectors have struggled over the last year, including hardware sales. During the global pandemic, PC sales and hardware boomed while people started to work from home. This initial surge has led to a decline in growth for this sector during the last financial year.

New operating systems, such as Windows 11, have also failed to encourage sales of new computers and laptops. However, the education sector is one of the few areas showing positive demand for hardware sales.

Telcos also weathering the load shedding storm

The telecoms sector also struggled over the last year; mobile operators are being forced to adjust their pricing and business plans as voice revenues declined and the rate of growth in data services stagnated. This is one of the reasons why telcos are shifting their focus to fintech services and content generation.

Telcos have been hit hard by load shedding, being forced to invest heavily in backup power capacity to run their nationwide infrastructure and facilities. “What is evident from the projections in the report is that while certain ICT business areas have shown muted growth, others have seen strong performance. In some cases, the growth is a temporary correction, while in others it is part of a new or sustained trend,” says Geerdts.

“Load shedding has impacted the industry at many levels. Service providers and customers are adapting to daily power outages but there is uncertainty about what stages they should be planning for. However, the ICT market continues to grow, as it remains critical to all sectors of the economy, and ‘keeping the lights on’ takes on a new meaning, both literally and figuratively,” he adds.

Enterprises that need various ICT solutions should work with an expert services provider. This will ensure that your digital ecosystems are set up correctly and serve as effective and efficient tools in your business. For more information about our connectivity services or to get a quote, email us at marketing@seacom.com or leave us a message.

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