South Africa is accelerating its digital transformation, with significant investments and policy shifts aimed at boosting the economy. Authorities are advocating for regulatory sandboxes to support the growth of digital platforms, with projections suggesting an infusion of R91.4 billion (approximately $5 billion) into the economy by 2035.
Research by Naspers and the Mapungubwe Institute for Strategic Reflection (MISTRA) indicates that e-commerce and other digital services could contribute 1.38% to South Africa’s GDP within the next decade. Naspers, which owns Takealot, the leading online retailer in the country, is expanding its services to include rapid one-hour delivery options to compete more effectively with global players like Amazon, which entered the local market in May.
Under the leadership of new CEO Fabricio Bloisi, Naspers aims to transform its e-commerce division into a major revenue generator, following the success of its food delivery platform, iFood. The division recently reported its first full-year trading profit of $38 million for the year ending March 31, highlighting its growth potential.
To realize the projected economic boost, MISTRA senior researcher Machete Rakabe emphasises the need to enhance growth rates to about 3% and invest in infrastructure, including data centres and digital identity systems. Despite a sluggish GDP growth of less than 1% over the past decade, attributed to energy shortages and deteriorating infrastructure, there is optimism that a focus on digital innovation could revitalize the economy.
Currently, digital platforms contribute around R5 billion to the economy. However, the formation of a new government of national unity after the ANC’s parliamentary loss in the May 29 election has renewed commitment to driving inclusive growth and shared prosperity.
Naspers South Africa CEO Phuthi Mahanyele-Dabengwa highlights the potential for significant economic gains through digital transformation. “Although still in its early stages, the shift to digital in South Africa aligns with global trends and presents a unique opportunity to unlock substantial economic potential for our nation,” she said.
The COVID-19 pandemic has accelerated global demand for e-commerce and digital services, yet South Africa has lagged in this transformation. To catch up, authorities are exploring regulatory sandboxes, controlled environments for testing new digital services before wider deployment. These regulatory changes are crucial for fostering innovation while ensuring consumer protection and fair competition, particularly against foreign giants that may exploit tax loopholes.
By focusing on local production and enhancing digital infrastructure, South Africa aims to achieve a robust and competitive digital economy, potentially adding R91.4 billion ($5 billion) to its economic landscape by 2035.
