Insight Matters, a 34-page report headed by Google Africa and World Wide Worx, is a first-of-its-kind report which speaks to the size of the Internet economy in South Africa. Per Boston Consulting Group’s definition, the term ‘Internet economy’ refers to:

Access to and use of the Internet, investment in infrastructure and expenditure in Internet activity in a country. These include Internet infrastructure, money spent on online retail and online advertising, and business and Government engagement with the Internet.”

The entire report is worth a read, but we’ve gathered a few highlights below:

• 2% of South Africa’s GDP comes from the Internet economy. This share is expected to grow to 2.5% by 2016.
• E-commerce is growing at a rate of 30% per year
• 63% of formal SMEs have a website (only 5% of SMEs with a website are in the red)
• An estimated 1.56 million jobs survive due to an SME web presence (indirect impact)
• By next year, half of the 10 million mobile phones sold will be smartphones

• World Wide Worx estimates that it takes up to five years “before new Internet users gain the confidence and experience in the medium to become active participants in the Internet economy”. (see above)
• 8.5 million Internet users in SA (25% increase from 2010)
• 17% Internet penetration rate (still behind Nigeria, Egypt, Morocco, Kenya)
• 126% SIM penetration, but at least 20% of SIM connections are from multiple-use situations
• When 1 billion SIMs are connected in Africa, it will equate to fewer than 600 million unique people
• 12.8% of the South African population had Internet access, but only 3.8% had broadband (ITU)

The finance and manufacturing industries are expected to contribute to the largest respective shares of the GDP pie, but it’s great to see how e-commerce is growing and now, in terms of dollars, is the same size as the agricultural sector.

We’d be curious to see how other relatively established e-commerce societies like Kenya compare. Kenya’s Internet economy likely contributes something like 1% to national GDP. Nigeria’s is most likely lower due to the large amount of oil revenue.

Be sure to check out the well-designed Insight Matters website too.

Source: “Internet Matters: The Quiet Engine of the South African Economy,” World Wide Worx / Google, May 2012.