High data costs hamper growth of small businesses in SA - expert
JOHANNESBURG - Internet connectivity has become an indispensable business tool for most entrepreneurs in South Africa, but the high cost of data is hurting many small and medium enterprices (SMEs), an industry expert said on Monday.
Data connectivity and digitization were vital in levelling the playing field for SMEs, allowing them to compete with larger, more established companies in their industry, said Jeremy Lang, regional general manager at Business Partners Limited, a specialist risk finance company for formal SMEs.
“However, the high cost of data in the country is severely impacting the profitability and productivity of many SMEs and startup businesses and can be a notable prohibitor when it comes to accelerating SME growth," he said.
He cited a new survey by research consultancy BDRC Continental which ranked South Africa 97th out of 196 countries in terms of competitive pricing, below other emerging economies such as Guatemala, Morocco and Tunisia.
Mobile data in South Africa is the most expensive out of the African continent’s six leading economies.
"Just as an example, the average cost of 1 gigabyte of mobile data in South Africa is between R99 and R150," Lang said.
"Taking into account that a business is likely to rely on massive amounts of data being exchanged within the span of a month, the cost adds up incredibly quickly. Kenya, which is the second most expensive economy for mobile data, is a little over half that price.”
Lang said mobile connectivity was also important, with an increasing number of entrepreneurs needing to be mobile for their businesses.
The growing popularity of mobile payment software and technology was also making it easier for SMEs to offer their customers card and online payment facilities, increasing the size of sales and orders they could process at a time.”
Making use of cloud services and online tools to manage data also helped reduce operating costs and improve efficiency, but SMEs could not exploit these benefits to their full extent if data costs remained high.
“South Africa needs more investment in communication and data infrastructure in order to improve accessibility, as well as improved regulations and incentives to bring down data and technology costs for the SME market.," Lang said.
"Growing the SME sector needs to be a priority, and making data more affordable and accessible can go a long way in making this happen."