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9 September 2022 – South Africa will see a big decline in inbound shipments of computer desktops, notebooks, workstations, and tablets in the third quarter (3Q), research findings from the International Data Corporation (IDC) showed this week, pointing to stretched spending patterns on the back of high inflation and a weaker rand.
Reports show that the ICT sector contributes more than 8% to South Africa’s GDP and this may have bumped up even further under the Covid-19 pandemic, which accelerated digitization and remote work. Slower inbound shipments of computing gadgets work against acceleration of digitalization and growth of the ICT sector.
The Worldwide Quarterly PCD Tracker by IDC shows that a total of 5.2 million computer units, tablets, notebooks and workstations will be shipped across the Middle East and Africa region in the third quarter of the current year. South Africa and Egypt will account for the highest volume declines of this.
“The biggest declines are expected in South Africa and Egypt, where massive projects delivered in Q3 2021 are not expected to repeat in Q3 2022,” said Fouad Charakla, an associate research director at IDC.
This comes as “consumer demand is expected to remain weak due to higher costs of living, which have inhibited consumer spending on other commodities”, including IT products. Many South African companies, including banks and other sectors, moved to digital and embraced remote working when the pandemic peaked, driving sales of computer gadgets.
This trend is, however, now slowing down as the economy struggles.
South Africa’s economy contracted by 0.7% in the second quarter of this year, dragged down by manufacturing and mining sectors that are sensitive to power outages that have quickened across the country.
The heavier industries under the tech sector, such as data centres and telecoms, are also sensitive to power outages while ill preparedness such as inability to install back-up power is also working against the computer industry.
Inflation and exchange rate volatility for the rand have also worsened consumer spending and purchasing power for South African imported products, including tech gadgets such as workstations, tablets and notebooks.
South Africa’s laptop market had looked to buck the slowdown in volumes during the first quarter of the year.
The market for laptops in South Africa “experienced marginal growth in the first quarter this year, recording a 3.7% increase year-on-year in unit sales to 214 000 units and a 9.9% increase in value,” market research company GfK South Africa was quoted saying by Mybroadband in June.
The increase in the value of the market for the first quarter was attributed to “inflation and annual price increases” amid continued supply chain pressures caused by Russia’s invasion of Ukraine.
Despite the projected slowdown in personal computer device shipments in the third quarter, South Africa’s tech industry has continued to attract robust investment in internet infrastructure and data centres.
This follows the landing of Google’s Equiano internet cable in Cape Town in August as well as heavy investments in data storage facilities by Africa Data Centres, drawing from a $300 million (R5.1 billion) investment by the US International Development Finance Corporation. Source: Business Report