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Kathy Gibson at IDC Directions in Sandton – Africa is a unique and very different market to do business in, but there as many challenges as opportunities.

“We live in a fast moving and dynamic political and social environment, says Mark Walker, associate vice-president: sub-Saharan Africa at IDC.

The biggest challenge for doing business in Africa is that fact that so much of it is still unconnected – both physically and virtually. “Moving data around is still a big thing,” Walker says.

Although there is a huge mobile penetration in Africa, Internet usage is still woefully low, he explains. “Even the data on South Africa shows a variety of opinions.”

Estimates from various organisations put internet penetration in South Africa at anything between 40% and 60% – and it is a lot less outside of our borders.

Technology is now available to help Africa leapfrog the rest of the world and participate in the digital transformation revolution.

But here are problems with corruption, with connectivity and with skills, Walker points out.

“Africa has a great young population that demonstrates a great uptake of technology and use of technology. If you an provide technology and education, you have a young energetic workforce.”

In sub-Saharan Africa, ICT spending is set to grow past $95-billion by 2021, at a compound annual growth rates (CAGR) of about 3,1%.

The slower growth, and change in direction of technology spend, will see increasing competition, and some companies will fail to make the cut.

At the same time, this will open up new opportunities. “We have to get used to a new way of doing business, Walker points out.

IT spending (without telecommunications) spending will exceed $19-billion by 2021, at a 4,4% CAGR, he adds. This growth will come mainly from software and services, with hardware lagging behind.

South Africa is still the biggest IT investor, at $9,4-billion, followed by Nigeria at $1,9-billion, and Kenya at $1,1-billion.

The defence is that South Africa has a strong enterprise market, while other countries in Africa are predominantly SMEs.

This means that IT vendors have to change the way they address the market in order to meet the needs of this massive SME opportunity.

Despite the lack of corporate players, a number of technology market leaders are emerging in Africa. Walker cites Jumia, the massive e-commerce player, along with other companies that are demonstrating innovative uses of technology.

“We have to start thinking about that is the use case, what is the customer experience that technology can enable. Then we have to align our business processes around that.”

In 2018, spending in sub-Sharan Africa will shrink for PCs and tablets, and IT peripherals. Modest growth will be seen in mobile devices and servers, storage and networks.

The big growth, however, will be in software at 9,2% and IT services at 7,4%.

In South Africa, financial services and government are still going to be the big IT spenders.

However, we are going to see big spending on manufacturing systems, retail and wholesale, construction, and the professional market.

Although they are still small contributors, big growth will be seen in utilities and healthcare, Walker says.

Most South African corporates (92%) are either currently engaged or planning digital transformation projects. “Digital transformation is happening quickly, and its effects are profound,” Walker says.

Most digital transformation activities are centred on migrating enterprise applications like email, ERM, productivity and CRM to the cloud. “It is still front-end orientated,” Walker says. “We will start moving at the back end soon.”

Government IT spending in South Africa is currently channelled towards computer equipment, communications technology, software and hosting service. But we are seeing greater focus on modernising and upgrading he legacy IT infrastructure to improve service delivery, driving platform spend and an investment in productivity and cloud services.

The real opportunity at the moment, Walker adds, is at municipal level, where cities are actively driving new investments.

Across the continent, most countries have national development plans, which spell out their visions for the future.

Walker believes that we will start to see a lot more transparency in government strategy and spend as the political landscape across the continent changes.

In fact, he believes that we are on the brink of a smart city revolution. There ae pilots taking place across the continent, but little is being done to connect them.

South Africa, Nigeria and Kenya are leading in smart city development, leveraging technology solutions to improve the efficiency of their cities.

On the financial services front, some massive changes are underway, Walker adds. “Technology is becoming a lot more important in banking.”

Customer experience is a big focus, driven by competition and customer maturity.

Security is driving a lot of the spend, along with data centre optimisation and consolidation, while banks look at to cloud-based services, industry-specific technologies and systems integration.

Walker warns that the IT channel has to change in order to survive in the next few years. “There will be a shakeout, consolidation and a transformation to digital transformation providers – and it is already happening.”