Understanding what is Happening in ICT in South Africa: A Supply- and Demand-side Analysis of the ICT Sector

While the South African information and communication technology (ICT) sector continues to demonstrate dynamic growth, particularly as driven by the mobile sector, the growth has not met the national objective of affordable access to the full range of communication services. Access to mobile services continues to grow, however, broadband access (particularly access to fixed broadband) remains very low in comparison to other lower-middle-income countries, and the prices of all communication services remain high by both African and global standards. Sector growth continues to rise at (at least) double the national growth rate, and is now contributing around 6% to national GDP. This growth is largely despite the sector’s policy, however, than because of it. The policy environment has not created an environment conducive to investment, nor institutional arrangements likely to result in effective competition - resulting in a number of regulatory bottlenecks that constrain sector expansion. The two small mobile players, Cell C and Telkom Mobile, have finally been able to put pressure on incumbents Vodacom and MTN, forcing down prices and stimulating innovative product and price offerings. However, while South Africa’s ranking on the RIA Pricing Transparency Index: Prepaid Mobile improved from 30th in 2012 to 22nd in 2013 (out of 46 African countries indexed), the cheapest mobile prepaid product in South Africa is still nearly 7.5 times more expensive than the African continent’s cheapest similar product, and still three times more expensive than the cheapest product available from a dominant operator in Africa.