(Bloomberg) -- Naspers Ltd., Africa’s largest company by market value, expects e-commerce and other digital platforms to inject 91.4 billion rand ($5.2 billion) into the South African economy by 2035.
That would see the sector contribute 1.38% to gross domestic product in just over a decade, according to a research report by Naspers and the Mapungubwe Institute for Strategic Reflection.
Naspers owns Takealot, South Africa’s top online retailer, and has been expanding its services to include one-hour delivery for items ranging from phone chargers to toys. That will help it better compete with Amazon.com Inc., which entered the local marketplace in May.
Naspers, the controlling shareholder of internet investing giant Prosus NV, aims to turn its e-commerce business into a cash cow under its new Chief Executive Officer Fabricio Bloisi, who built-out food-delivery business iFood. The division reported its first full-year trading profit of $38 million for the year ended March 31 as it managed to scale its business after years of investment.
The 90 billion rand plus economic injection can be achieved “even earlier, if we are able to increase the country’s current growth rates to about 3%,” Mistra’s Senior Researcher Machete Rakabe said in an interview. “We need to also focus on infrastructure to make sure we can reach everyone, as well as data centers and digital identity documents.”
GDP has expanded by an average of less than 1% over the past decade because of energy shortages and collapsing infrastructure.
The economy’s lackluster performance has meant that South Africa hasn’t fully benefitted from its youthful population, together with one of the largest upper-middle-income markets in the region. Currently, digital platforms contribute about 5 billion rand to the economy, said Rakabe.
Renewed Energy
A commitment to accelerate reforms and investment by the government of national unity, which was formed after the African National Congress lost its parliamentary majority in May 29 elections, could change that.
“There is a renewed sense of energy and commitment across various players in South Africa to get our country on the path of inclusive economic growth and shared prosperity,” said Naspers South Africa CEO Phuthi Mahanyele-Dabengwa. “Though still in its early stages, the shift to digital in South Africa mirrors global trends and offers a rare chance to unlock significant economic potential for our nation.”
Scaling the digital platforms could create as many as 340,000 jobs by 2035 in a country with one of the highest jobless rates in the world, according to the research.
The government is already in talks with Takealot to partner in an initiative to stimulate South Africa’s township economy in locations on the outskirts of its metropolitan and urban areas, Trade Minister Parks Tau said at the launch of the report.
Takealot’s current program includes initiatives such as delivery driver development and aims to add more products made in townships by small businesses and local industries to its marketplace.
Naspers shares have risen more than 16% this year, valuing the company at 662 billion rand as at 12:55 p.m. local time on Tuesday.
(Updates with comments from trade minister in 11th paragraph)
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