Thursday, April 25, 2024

Deloitte’s peak into the next generation of Africa’s technology

The rise of the digital age invaded Africa before it could prepare for its disruption. The introduction of technology, media and telecommunications (TMT) ushered the continent into an enormous pool of information causing a dramatic shift to the continent’s natural economic landscape, writes SUNDAY STANDARD reporter TLOTLO LEMMENYANE from Johannesburg, South Africa.
Realising the vast impact of TMT sectors to economies, Deloitte saw an opportunity to sculpt thought leadership around this subject so as to guide industries in harnessing information and blending it with functional skills. The professional service firm’s insight on TMT sectors gave rise to its flagship research title, TMT predictions. The TMT set of predictions, launched in 2001, identify decisive changes that inform deliberate industry thinking, and also explain how the changes will take place over the next 12 to 18 months. The predictions are informed by extensive discussions with industry executives, analysts, commentators as well as a wide ranging dialogue with consumers.
The TMT predictions for 2015 were presented in South Africa last week Thursday by Mark Casey, Deloitte’s Africa leader for TMT, following which TMT industry titans broke down the trends into practical considerations for business leaders in Africa. One of the insights from the predictions is on the global sales of the five consumer electronic devices (smartphones, PC’s, tablets, TV sets and video game consoles) reflected on as multi-functional and important in entertainment and media consumption. Deloitte anticipates that the global sales of all five of these devices is expected to exceed $750 billion in 2014, up $50 billion from 2013 and almost double the 2007 total, but however foresees that their growth will adopt a state of little or no change. Put differently, sales are expected to continue growing but it will be at a slower growth rate than over the past 10 years. “Revenues for each individual category may turn out to be somewhat higher or lower than expected, but combined sales across all five categories are likely to be fairly steady and predictable ÔÇô plateauing at roughly $800 billion annually after a decade of double digit growth,” read the predictions.
Africa‘s claim to fame comes from its rich endowment of natural resources and for decades the yield of commodities to economic growth was the status quo. The continent enjoyed outpouring growth which according to the United Nations Conference on Trade and Development (UNCTAD) caused analysts to argue that the continent is poised to play a significant role in the global economy in the twenty-first century. The high economic growth however treaded parallel to development challenges such as extreme poverty, inequality and high unemployment in many of the countries in Africa, the consequence of which include a stagnation of Africa’s middle income group due to incomes that did not beat the cost of living. This dynamic gives rise to the belief that the global sales predictions of the mentioned consumer electronic devices might be underestimated given that economic transformation could unlock the potential of Africa in terms of the uptake of digital devices and their use.
In an interview with Sunday Standard, Casey explained that even though Africa like South East Asia and Latin America are still absorbing digital devices at a significant rate, the enormous growth is however offset by the dramatic decline in developed countries. “You are going to see a pick in Africa which looks like a contradiction with the predictions but it is not. The predictions looks at the developed world together with emerging markets and it distorts the statistics” said Casey. He says that the prices of devices, memory and storage are falling at a dramatic pace but Africa at the moment does not feel it, a situation which explains why the sales are expected to hit a ceiling of about $800 billion per year.
Casey disclosed that in April last year South Africa was leading the pack with regard to the penetration of smart phones and soon after Nigeria followed the trend.
Africa has to date made strides with infusing ICT Infrastructure into its development agenda but internet connection is however reported to be low in most countries, another issue that gives rise to the belief that the plateaued growth could be underestimated. Casey however maintains that it is just a matter of time until broadband is accessed at a cheaper price making it affordable to Africa to use smartphones. “The cost of data is coming down at a mathematically derived rate, as of today, yes it is expensive but it is on a steady downward path” he said. Casey argued that when the sale of smartphones reaches a certain threshold, while at the same time the availability of the bandwidth reaches a certain coverage point and the prices also reach a certain ceiling, the peak of all these things will cause what is happening in the developed world to also happen in Africa, which is a case where ownership and use of a smartphone comes at a very low cost.


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