Local operators' ICT spending aided the economy through increased investments into fixed capital items during the third quarter of the year, the SA Reserve Bank noted in a recently-released publication.
The bank said the economy continued to expand in the third quarter; however, this was at a “lacklustre” pace as growth grew at about the same rate as during the second quarter. However, fixed capital investments, which aid longer-term sustainable growth, grew at 5.6% in the third quarter, up from 5% in the previous quarter.
“Albeit from a low base set in 2009, real fixed capital expenditure accelerated further to reach a brisk rate of growth of 5.6% in the third quarter of 2011,” said the bank.
Entities in the communication sector raised their capital outlays in areas such as optic cables, noted the bank. According to the Reserve Bank's latest quarterly bulletin, the transport and communication sector was boosted by “robust growth” in Internet use and downloads.
Operators have been investing in fibre-optic cables in order to provide their own backhaul, and have also spent on upgrading base stations. Vodacom alone will spend R6.3 billion in SA this year, and MTN another almost R4 billion.
Looking up
Car manufacturers and the banking industry also raised their capital expenditure, it said. The bank noted that capital spending by public corporations such as Eskom and Transnet also increased.
Private business enterprises in the agricultural sector stepped up capital spending in the third quarter against the background of favourable product prices and sizeable crops, the Reserve Bank said.
Private business enterprise as a whole grew 5.8% in the third quarter of the year, up from the 5.6% growth it recorded in the second quarter, and 5.5% in the first quarter.
In 2010, the sector's investment slowed 0.8% for the year, although investment started picking up in the second quarter and remained in positive territory for the rest of the period.
Absa Investments analyst Chris Gilmour said the rate of growth bodes well for the economy. He pointed out that capital spend is growing faster than gross domestic production (GDP), which is expected to reach 3.1% this year.
Gilmour said ICT spending is generally at a rate twice that of GDP.
Capital spending creates long-term sustainable jobs, said Gilmour. He pointed out that most of SA's economy is demand driven, but a shock to the global economy could see demand come off, which could affect GDP growth.
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