There are an estimated 20 million e-commerce users in South Africa, and the number is expected to grow to 24.8 million by 20211. While still in its early stages, South Africa’s e-commerce market has seen significant growth of over 20% every year, since around 20002.
South Africa has high rates of mobile penetration, at 68% or 37.5 million unique mobile subscribers3. The country’s online shoppers are increasingly making purchases on mobile devices – between 2015 and 2016, growth in online spending via mobile device increased by an estimated 65%. This is expected to further increase by 123% by 2018, as mobile penetration rates rise.
The bulk of online purchases are downloadable digital entertainment and education (53%), event tickets (47%) and clothing, apparel, or footwear (45%). As English is a common language, this provides an opportunity for content developers in Singapore, along with event and retail businesses. Besides South Africa, the continent as a whole is seeing a growing trend in e-commerce.
1 “South Africa e-commerce insights”, eshopworld
2 “Online shopping growing in popularity in SA, but lags global pace”, The Media Online, 22 January 2018
3 “SA experiencing ‘unique mobile penetration’ – GSMA report”, SA Promo Magazine, 2017
In 2017, South Africa was ranked the third best African country for information and communication technology (ICT) infrastructure by the International Telecommunication Union4. The country has five cellular providers that service over 20 million subscribers, giving it one of the most advanced mobile telecommunications networks in the world. The ICT infrastructure features a full digital system, and sophisticated wireless and satellite communication.
The government plays a significant role in the ICT industry growth, with public sector ICT spending expected to rise to S$976 million by 20195. Key drivers include IT outsourcing, and managed services.
South Africa’s global ICT and business process service industry grew by 22% a year from 2014 to 20186. In particular, the Cape Town region has become a major hub for call centres and business process outsourcing (BPO). Corporations with call centres there include Amazon, Lufthansa, Walmart, and many other major multinational firms.
A key reason for South Africa’s thriving BPO industry is the high level of fluency in English, as well as good educational standards, in the local workforce. Singapore companies can find many opportunities for collaboration, such as in providing technical support or training needs for this sector.
South Africa’s government is also seeking to expand online government services, as its ICT sector and internet users grow more advanced. This provides business openings for Singapore firms, in areas such as intra-government networks, public service delivery, and government-to-business transactions.
4 ICT Development Index 2017, International Telecommunications Union
5 Frost and Sullivan study, 2015
6 “South Africa’s BPO Industry - pivoting for next generation of service industry”
South Africa needs to improve the country’s extensive rail and road networks. Gauteng, one of the main provinces in South Africa, is situated 600km from the nearest port. The country’s leading exports, such as coal, iron ore, and manganese, also need to be transported from deep within the country’s interior. South Africa thus requires extensive freight infrastructure, to overcome the logistics involved.
The country’s existing rail network is the 14th largest in the world, stretching 21,000km. 95% of the rail network was built before 1938, and much of the network requires substantive upgrading.
South Africa also has the longest road network on the continent, at approximately 750,000km. Roads account for around 89% of the country’s freight movement. While 90% of the road network is considered to be in good condition, around 78% of the roads are now older than their designated 20-year lifespan7.
Singapore companies with expertise in these areas can find high demand for their services. Expertise in related industries, such as in freight logistics, will likewise find opportunities in South Africa.
7 “South Africa's transport infrastructure receiving significant boost in investment”, South Africa 2016, Oxford Business Group
South Africa has one of the most established tourism industries in Africa. Tourism accounts for about 3% South Africa’s GDP in 2017, and provides 4.5% of total employment8.
South Africa’s most recent tourism triumph was successfully hosting the World Cup in 2010, during which the country drew over 8 million visitors. As of 2017, the country receives around 8 million visitors a year9, mainly from the United States, United Kingdom, and Germany.
South Africa’s government considers its tourism industry to be a key sector. Since 2011, its National Tourism Sector Strategy has seen the inclusion of e-visas, regional visa schemes, and visa-waiver programmes. Singaporeans do not require visas to visit South Africa.
Prime tourist attractions in South Africa are its natural landscapes, a rich culture and heritage, game reserves, and local winemakers. The most popular destinations are Kruger National Park, the coastal resorts along the Western Cape, and the historic cities of Cape Town, Johannesburg, and Durban.
South Africa is also on a drive to increase its popularity as a business destination. Cape Town ranked as one of the best cities in Africa for business tourism in 201710, and South Africa hosts around one million business delegates every year.
There are ample opportunities for Singapore businesses in the hospitality industry to expand into South Africa. This will be aided by the widespread use of English (among both locals and the bulk of tourists), and the country’s long established reputation as a tourism hotspot.
8 Travel & Tourism, Economic Impact 2018 South Africa, World Travel & Tourism Council, March 2018
9 World Bank Open Data (2010 – 2017)
10 “Cape Town ranked best business tourism destination in Africa”, Bizcommunity, 10 May 2017
According to a report by the Global Infrastructure Hub, South Africa is one of nine African countries that needs to invest extensively in water and power supply over the coming decades.11 The investment is needed to address infrastructure gaps related to economic and population growth, and to meet United Nations Sustainable Development Goals.
The country needs to invest an estimated S$3.1 billion over the next 10 years from 2018, to prevent dams running dry12. Only around 64% of the country’s households have access to a reliable water supply service, providing ample growth opportunities for Singapore companies in this sector.
11 “Global infrastructure investment need to reach $97 trillion by 2040”, Tralac, 26 July 2017
12 “SA needs R33 billion for water security plan”, Independent Online, 3 September 2018