Elections 2019 to be tough on ICT market

Simnikiwe Mzekandaba
By Simnikiwe Mzekandaba, IT in government editor
Johannesburg, 14 Feb 2019
South Africans will head to the polls in May to elect the country's sixth democratic administration.
South Africans will head to the polls in May to elect the country's sixth democratic administration.

The International Data Corporation (IDC) predicts SA's ICT spend for 2019 will be impacted by the upcoming general elections.

This is the sentiment shared by Mark Walker, IDC associate VP for Sub-Saharan Africa, during his presentation at the IDC Directions 2019 event in Johannesburg this week.

The IDC has charted an outlook of this year's ICT spend, looking at three key markets in Sub-Saharan Africa, namely SA, Kenya and Nigeria. While Kenya's elections have passed, South Africans and Nigerians are heading to the polls in May and 16 February, respectively.

Detailing SA's prospects for 2019, Walker says we can expect "very slow" growth in the ICT sector, which is predicted to reach 3.8% compared to 7.5% in 2018.

He points out there are a lot of concerns about whether the political environment will change, and if it does, how the economy is going to be affected.

"The discussion I've heard about SA is that if one does not make first quarter numbers by the end of February, then just forget about them. The second quarter is going to be a really tough period based on what we are seeing, as well as the sentiment from Dubai and speaking to our partners.

"Elections are in May, and there is the April slowdown because of all the public holidays...hopefully by late June everything will have settled down and we will see a surge.

"The third quarter can go either way. This can be a huge quarter based on pent-up demand, especially if everything goes smoothly with the elections, and government spending can start trickling through. The fourth quarter can also be really big, but this is an assumption based on a best case scenario.

"We are going to have to fight for every cent, there will be a lot of competition for market share and it's going to be a tough environment in SA for the next 12 months."

Areas of growth

Walker believes collaboration will be critical in the low growth environment that is expected for the year ahead.

"If you are in the business of cutting-edge and new technologies, there will be huge growth rates. For example, process automation.

"Competition is going to become incredibly intense over the next year. There must be a platform for collaboration in order to gain market share. The way technology is moving at the moment is that there is so much happening that very few companies can do end-to-end solutions. So, look for opportunities to collaborate and platforms that you can build on together."

Walker cautioned organisations not to look at the African market as a "one size fits all" when doing business.

"Africa is unique, difficult and has lots of challenges. We need to be aware and make the rest of the world aware of this too, so that they start conforming to our requirements for this continent.

"South Africa still has a lot of influence into the rest of the continent, but the country doesn't use its influence well enough. We tend to stand on the back foot and let them [international counterparts] say 'this is your number'.

"In Kenya we are seeing a very high growth rate. There is a lot of interest in Kenya and the rest of the East Africa region, for example in Ethiopia. In Nigeria, we are still expecting very slow growth."

Walker advises organisations to look at frontier markets, putting his bets on countries like Ethiopia, Uganda and Botswana.