Kathy Gibson is at IDC Directions in Woodmead – Digital transformation is a reality around the world: but where do South African companies stand?
“In Africa, there is no one-size-fits-all,” says Mark Walker, associate vice-president: South Africa at IDC.
The local market is seeing slow growth – form 7,5% last year to 3,8% this year. Kenya is growing, from 1,4% to 5,4% and Nigeria is still experiencing slow growth of 2% this year, compare to 2,6% last year.
“If you have cutting edge technologies you will see huge growth rates,” Walker adds. “But the model has changed, and now you have to sell large volumes at lower margins.”
Market share is going to be important, and collaboration will be the only way to accomplish this. “Look for opportunities to collaborate, where you can build on platform together. That’s the only way to survive in these low-growth markets.”
There are a number of elections taking place across the region, Walker cautions, and this leads to political uncertainty.
The second quarter is going to be especially tough in South Africa, he adds, with our national and provincial elections scheduled for May.
“The third quarter could go either way: it could be a huge quarter from pent-up demand and government spending; and the last quarter could be really good.
“But it could go either way. There are no guarantees.
“There has to be growth, but there have to be realistic expectations.”
Walker advises local companies to start looking at new frontier markets – countries like Ghana, Rwanda, Uganda, Tanzania and Botswana.
When it comes to telecommunications companies, Walker points out that voice is either not growing or going backwards. Data is growing, but telcos need to find a way to monetise it effectively, he says.
Telecommunications companies are still grappling with the challenge of remaining relevant to their customers.
Some of the challenge are around the rise of Internet of Things (IoT), declining voice revenues, and a decline in traditional media, says Sabelo Dlamini, senior research and consulting manager at IDC.
The telcos are also battling to marry their long-term strategic visions with short-term tactical plans, he adds.
The challenges in this environment include making investments and fibre and 5G while adopting flexible business models that allow them to compete against non-traditional industry players.
Another big challenge is the internal transformation of telco business. They have to consider network transformation at the same time as digital transformation and the adoption of innovative new technologies like artificial intelligence (AI), machine learning (ML), robotics and automation.
Against this backdrop, double digital growth is a thing of the past, Dlamini points out, although South African telcos are still expecting positive growth in 2019, underpinned by rising consumption and stronger investment trends.
Mobile and fixed voice revenues are declining, with data seeing some increases – although not as much as might have been expected, Dlamini says. Fixed data is driven by fibre deployments, while mobile data use is increasing as a function of mobile device growth.