IF you though the hottest business sector in the Cape were its tourism industry - fuhgeddaboutit. The clever money may rather be in the information and communication industry, a new survey by Wesgro and CITI shows.
Says Wesgro's senior economist Anders Aeroe; "Our figures show this sector to be one of the hidden
jewels of the Western Cape, with its share of the total market well in excess of the province's
contribution to the GNP of the country. Better still, it keeps growing."
The survey shows that South Africa's information and communication technology (ICT) industry
was worth over R19 billion in 1997.
Adding telecommunications, broadcasting and audio vision to this, the converged market was
worth about R28,5 billion, of which the Western Cape share represented about R3 billion.
The ICT market value last year grew to R43 billion, of which the Western Cape represented
around R6 billion, according to CITI's (Cape Information Technology Initiative) Raven Naidoo.
Now R6 billion is no mean figure. This represents no less than 15% of the total ICT value.
Tourism in the Western Cape last year generated R11,5 billion, or 9,1% of the national value.
And by all accounts, the fortunes of our local tourism industry are flagging.
On the fixed line services side Telkom of course holds its limited monopoly. Its Telematics
division has its roots in the Western Cape, this division being the one to develop the world's
first broad-usage tect-based electronic commerce system - known at that time as Beltel. Telkom
has centres of excellence at the universities of Cape Town, Stellenbosch and Western Cape.
Telkom is also a sponsor of the Institute for Satellite Technology, which uses the converted
facilities of the now defunct SA Missile Technology Program based at Houwtek.
In mobile telecommunications Vodacom has its Technocentre in the Western Cape - housing its
main call centre, network operating centre and the majority of its IT inventory and its billing
division. The level of equipment used by the network is of such a magnitude and sophistication
that the US State Department conducts annual inspection on the premises to ascertain that the
technology is not being used for other purposes.
In telecom equipment Cape Town has Tellumat (formerly Plessey), considered to be a world leader
in the manufacture of private branch exchanges (PBX/PABX) and wireless radio equipment.
Internationally Tellumat is currently exporting to 40 countries.
The survey also notes that the Western Cape is becoming a growth node for the development of
call centres of customer contact centres - largely the result not of technology, but thanks to
the favourable costs and skills of the operators.
The availability of relatively cheap skilled labour and the low turnover rates of staff has
made the region attractive for these centres. The Internet has increased the global reach of
call centres and time zones and language skills are increasingly differentiating factors for
call centre operators. Vodacom, Telkom, Lufthansa, SAA, Sanlam, Corel, Old Mutual and several
other major players have call centres in this region.
In the IT sector specifically, hardware is really no big stick, but it is in software
development where the action is taking place. The survey notes that the growth is based on
favourable exchange rates, a good skills base and niche market products. Developers have a
good international reputation and knowledgeable base in the development of products for the
financial services markets, retailing and manufacturing, Web based business applications and
medical research are areas of smaller importance.
Most software developers in the Western Cape develop and refine products for the local market
with a view to marketing internationally.
A few of the local firms involved in development for the financial sector have broken into the
international market.
The penetration level for Internet access in the business sector is nearly 95%, but the home
user market is largely underdeveloped, largely because of the double-charge regime, where
payment to an ISP and to Telkom for dial-up charges is the order of the day. The low level of
PC penetration is another factor for low home penetration. Many, though, see the fast growing
mobile sector as an opportunity for mobile Internet penetration.
There are more than 120 consumer-orientated ISPs across the country - the largest two being
M-Web and WorldOnline - both of whom have their headquarters located in the Western Cape.
Together they command about 80% of the home market.