ICT Sector Overview

ICT

By Raine St.Claire

While still in a development phase, South Africa’s ICT and electronics sector is highly regarded as sophisticated and remains a major player in Africa’s ICT market.

Leading in mobile and security software, as well as electronic banking services, and serving as a regional hub for neighbouring countries, both local South African companies and subsidiaries of international firms have played a crucial role in establishing new telecom networks across Africa as a significant boost to the country’s GDP.

Market Analysis

The South Africa ICT market, valued at $15.8-billion in 2023 is expected to reach $ 22.2-billion by 2030, with an annual growth rate of more than 5% according to the latest market report by RationalStat.

In terms of vertical end-use segments, the manufacturing sector is the largest segment with a 9.4% market share, followed by the retail banking sector. Additionally, the government sector is anticipated to be the fastest-growing segment recording an estimated CAGR of 8.21% during the forecast period.

Employment Stats

Statistics from The Commission for Employment Equity’s (CEE’s) 23rd Employment Equity Report for the 2022/2023 financial year (1 April 2022 to 31 March 2023) show gradual improvement in the male/female ratio in the sector between 2020/21 and 2022/23, with more women joining the sector versus their male counterparts.

2022/2023 financial year

• Total employees 255 933

• Year-on-year increase of 3 000 (0.3%)

Women

• 2020/2021: 95 633 (39.5%)

• 2022/2023: 105 604

• Year-on-year increase of 9 971 (41.3%)

Men

• 2020/2021:146,333 (60.5%)

• 2022/2023: 150 303

• Year-on-year decrease of 3 970 (58.7%)

Growth Among African Females

• 2020/2021: 47 567 (19.2%)

• 2022/2023: 54 338 (21.2%)

• Year-on-year increase of 9 971 (41.3%)

Employee Growth

• professionally qualified workforce increased by 1.4%

• top and senior management increased by 1%

• semi-skilled persons increased by 3.30%

• skilled workers increased by 2%

• unskilled workers increased by 1.8%

Industry Scorecard

• Level 4

• Black ownership: Employment equity increased to 88% of target up from 74.5% in 2022

• Management: increased to 61% of target up from 54% in 2022

• Skills development increased to 91% of target up from 81% in 2022

• ESD increased to 86% up from 62% in 2022

• SED increased to 89% up from 87% in 2022

Top Industry Players

IBM Corporation

• Level 1 Score 127.82%

Vodacom

• Level 1 Score 124.61%

Telkom

• Level 1 Score 120.06%

Microsoft

• Level 1 Score 120.58%

Navigating Challenges: ICT Sector compliance and transformation

The ICT sector has pointed out that this is one of the most challenging sector codes to comply with.

For example, a company with 100 points on the generic codes would achieve a level 1 B-BBEE score, whereas an ICT sector company with the same 100 points would only achieve a level 4 score.

The Sanlam Gauge Transformation Report highlighted a disparity between the requirements of the ICT sector codes and the industry’s actual needs. For transformation initiatives to be effective, they must align with the industry. The Employment Equity Amendment Bill has introduced Employer Equity Certificates of Compliance. Without these certificates, companies won’t receive points under the management control pillar of the B-BBEE scorecard.

The industry’s aim is to address historical imbalances and promote diversity.

As a result there are requirements for:

• Significantly more contributions to economic transformation within the ICT sector

• Higher targets are for ownership, enterprise development, and socioeconomic development

• Tailored empowerment efforts for specific needs of the ICT sector

Sources: Mordor |The State of the ICT Sector Report in South Africa MARCH 2023 |iTWeb | Sanlam Transformation Gauge Report |Global Data