SA's app economy sees tenfold growth

Sibahle Malinga
By Sibahle Malinga, ITWeb senior news journalist.
Johannesburg, 15 Aug 2022

South Africa’s app economy has grown tenfold over the past two years and is tipped for more growth, driven by the booming internet penetration and an increase in mobile-first consumers.

This emerged during the recent App Growth and Marketing Insights Summit, organised by peer-to-peer file-sharing app SHAREit, in partnership with digital media firm PerformDM.

As millions of South Africans took to online channels for entertainment, education, remote work and more during the COVID-19 pandemic, this massively boosted the local app economy, leading to a major transition to a mobile-first approach to everyday living.

SA has seen more than 10% growth in the number of internet users from the pre-pandemic period to the winding down of the lockdowns – to an estimated 40.8 million internet users in SA.

During an interview with ITWeb on the side-lines of the summit, Arunabh Madhur, regional VP and head of business at SHAREit EMEA, noted SA’s growing app consumption is boosting the local application developer ecosystems, serving as an enabler of new business models.

“The app economy in SA has grown 10 times since the onset of COVID-19, or maybe even more in some verticals. There are about 5 000 locally-developed apps on the Android Play Store in SA today.

“The five large verticals which are driving the app economy in SA are e-commerce, OTT/entertainment, fintech, gaming and delivery services apps – which all captured and grew the app economy over the last two years,” said Madhur.

Arunabh Madhur, regional VP and head of business at SHAREit EMEA.
Arunabh Madhur, regional VP and head of business at SHAREit EMEA.

According to a report by AppsFlyer, Sub-Saharan Africa saw impressive growth in the app economy, with downloads in Nigeria climbing 160%, up 100% in Kenya and rising by 52% in SA in 2021.It notes e-commerce installs increased 55% on Android and 32% on iOS in 2021.

Madhur pointed out that SA’s app economy has largely shown similar growth trends to those of other emerging economies, such as Russia, Mexico and the MENA region, among others – which are catalysed by leapfrogging – as more consumers in these markets find value in digital services.

In July, 20 million to 22 million people in SA used a smartphone, which accounts for about one-third of the country’s population, according to Statista. However, the overall number of mobile connections is much higher, at more than 90 million, as feature phones remain widely used in the country, it says.

SHAREit, a content streaming and gaming platform, says it has experienced massive growth in the South African market, with over one million mobile apps shared across SA every day using the SHAREit app.

“From an advertiser perspective, there is great interest from local organisations that want to grow their brands and also develop an app to drive retention and engage customers,” Chanel Hardman, country director for SHAREit Africa, told ITWeb at the summit.

“The other portion is we’ve seen lots of users showing interest in a range of apps, as a result of the high mobile connectivity, specifically in SA. There is a lot of curiosity from a consumer perspective, and gaming and entertainment are big contributing verticals to the local app economy. This is in addition to popular communication and messaging apps such as WhatsApp and Telegram, which are quite big locally.”

Chanel Hardman, country director for SHAREit Africa.
Chanel Hardman, country director for SHAREit Africa.

According to Hardman, while the decrease in data costs has been a significant contributing factor to growing SA’s app economy over the last two to three years, many online services have actually increased their fees amid the high cost of living.

“So the increase in app fees adds to the already high cost of living in South Africa. But consumers still find value in apps because the time and money spent on travelling to go to the store, for instance, has now been saved by using online services and offerings. This is why the overall app economy continues to grow massively.”

While local app developers and publishers have enjoyed growing support from locals, many challenges continue to plague the ecosystem, including a lack of funding, security issues and having to prove themselves worthy of the same trust as bigger, global brands, she continued.

“We have a country that has tons of talent, and software developers have been creating innovative solutions. But the app economy is still a learning curve for most people. There is still high cost associated with app development in SA.

“Security is another issue across many apps – the online space comes with a fair share of risks which app developers have to overcome daily. Digital literacy is also something that developers and app companies need to focus on, to educate users on how to better use their app and equip them with basic skills to find convenience via the apps.”