ICT spending rises to $110 billion in Africa —IDC

According to the latest International Data Corporation (IDC), the Worldwide Semiannual ICT Spending Guide, the Information and Communications Technology (ICT) spending in the Middle East and Africa (MEA) is predicted to reach $110.94 billion this year, representing year-on-year growth of 5.1 per cent.

The global technology research and advisory services firm expects the market to total $133.56 billion in 2020, expanding at a Compound Annual Growth Rate (CAGR) of 4.8 per cent over the 2015–20 forecast period.

Overall ICT spending reached $105.51 billion in 2015, with consumers accounting for just over $50 billion of the total, or 47.6 per cent. The consumer sector exhibited strong growth over the 2012–15 period, with spending increasing at a CAGR of 19.1 per cent.

However, IDC expects that rate to slow considerably to 3.5 per cent for 2015–20, with faltering smartphone demand largely to blame.

“The high rate of growth seen in the consumer sector over the last few years was driven by a surge in demand for smartphones, with the devices accounting for a majority share of consumer spending,” said Mr Jebin George, a senior research analyst for industry solutions at IDC Middle East and Africa.

“However, market saturation and challenging economic climate has led to a slowdown in demand for new smartphones, a trend that is expected to continue over the coming years,” he added.

Spending by the business sector is expected to total $57.69 billion in 2016, with IDC forecasting a five-year CAGR of 6.0 per cent through 2020. The telecommunications ($12.88 billion), finance ($9.27 billion), government ($8.85 billion) and manufacturing ($7.13 billion) sectors will account for the largest share of spending this year. However, the fastest-growing sector over the coming years will be healthcare, with IDC expecting ICT spending by the industry to increase at a CAGR of 7.9 per cent over the 2015–20 forecast period.

“Organisations across the region are increasingly focusing on reducing costs and driving efficiency improvements as they try to come to terms with the prevailing economic environment,” George said.

He added that “Businesses no longer see ICT as a cost centre, but rather as an enabler of innovation and efficiency, and this change in perspective is helping to drive IT spending growth in the region.”

In terms of size, IDC expects large businesses (more than 500 employees) to account for 56 per cent of total business ICT spending in 2016. Medium-sized businesses (100–499 employees) will contribute close to 20 per cent of the total; while small businesses (less than 100 employees) will account for the remainder.

Hardware traditionally dominates ICT market spending, and IDC expects this trend to continue with hardware accounting for 69 per cent in 2016.