Research on the Performance of the Services Sector

4.18. Challenges/Barriers

Key Challenges to the South African Tourism Industry are:

Transformation and Access to Tourism Opportunities

Transformation of the tourism industry in South Africa is a key problem as the access to the opportunities has been limited for SMMEs and black owned enterprises. In order to create jobs and develop SMMEs and improve the economic conditions within the country, transformation within the tourism industry needs to be addressed.

Increasing Distribution and Geographical Spread of Tourism Products and Services

At the moment the tourism offerings and products are concentrated in the main tourism hubs of KZN, Gauteng and the Western Cape. To increase the economic impact of tourism and tourism expenditure to the rest of the country it is important to improve the distribution of tourism products and improve access to tourists to areas outside of the main tourist hubs.

Addressing Seasonality of Tourism Demand

Tourism in South Africa is seasonal and this seasonality of the tourism products and offerings needs to be addressed to increase the volume of tourists and the expenditure to benefit the country’s economy further and create more jobs.

Tourism offerings and products are subject to seasonality and demand and to ensure the economic viability of the tourism industry in South Africa, it is necessary to develop products and services that are sustainable and have a low impact on the environment while still having a maximum impact on the economy, this however is difficult as the tourism industry is highly competitive and South Africa has to compete with established eco-tourism destinations and tourism abroad.

External Factors that Influence Tourism Supply and Demand

Political, economic and social factors such as economic fluctuations, political instability and social unrest can affect the tourism flows into the country; however these factors are usually unforeseen and are addressed as necessary.

ICT Sector

OVERVIEW OF THE ICT SECTOR

The subsequent discussion presents the overview of the ICT sector as a component of the services sector. It presents development trends of the sector both at international to local level. The policy and legislative background to support this industry growth is also analysed.

Defining ICT

The OECD defines the ICT as a combination of manufacturing and services industries that capture transmit and display data and information electronically. It is a broad sector that includes ICT equipment, ICT devices, electronic components, and ICT services such as telecom, eHealth, business and education services. Traditionally, it includes all hardware and software that store, receive, transmits or retrieve information. The sector encompasses all information processing technologies such as computers, Internet and telecommunications.

The information element of ICT is divided into two types of products; traditional computer based technologies, and digital communication technologies. Traditional computer based technologies include hard drives, processes and office applications while digital communication technologies include computerized and digital networked information and technologies.

The communication element of the ICT relates to and includes information and data that is transferred over networks using technology to send and receive the information. There are two types of networks, internal and external. Internal networks are local area networks (LAN) and external are Wide Area Networks (WAN) that allow individuals to communicate beyond internal networks. The ICT sector is divided into two subsets; Manufacturing and Services. Manufacturing includes the manufacture of computer hardware and telecommunication equipment. Services include IT services such as customer software applications, Computer software packages, and Telecommunication services.

ICT Trends

During 2010, the ICT sector experienced some growth after the 2009 recession. There was a renewed emphasis on upgrading broadband infrastructures and expanding the reach in rural areas through mobile and fixed technologies. Public network equipment spending increased by 14.5% in 2010 due to the launch of new projects internationally. The total telecommunications market in the five international regions had an estimated USD 3.1 trillion value and this is expected to rise to USD 4.1 trillion by 2014⁵². The demand for telecommunications and internet subscriptions will continue to grow as the number of users increase and the demand for these services in business activities increase.

International Trends

In 2010 the five international regions for telecommunications were Canada, Europe, Middle East/Africa, Latin America and Asia Pacific. These countries experienced an increase of 5.5% in telecommunications in 2010, after a decline of 1.6% in 2009. Fixed broadband increased by 9.9% while wireless services experienced a growth of 9.4% and public network equipment increased by 8.4%⁵³. The only sector that did not experience growth during 2010 was dial up internet. The most likely reason for this is that more people are making use of mobile technology and wireless connections and the need for residential dial up connections may be decreasing.

The top four countries that export ICT technology and equipment are Philippines, Singapore, Malaysia and Costa Rica. The Philippines is the top exporter, with 66% of its exports being technology. This is followed by Singapore with 51%, Malaysia with 40% and Costa Rica with 39%.

The international broadband market is huge, with Europe being the largest in the world, with an estimated 128.3 million lines. Between 2009 and 2010, 9 million new lines were installed in Europe. The fixed broadband penetration rate in Europe has continued to grow and by July 2010, the number was 25.6%.

Fibre optic cables and network usage have increased internationally and at the moment Italy is the largest FTTH market in Europe with over 2.5 million homes connected.

The ICT hardware manufacturing sector is one of the largest growing and fastest growing manufacturing industries in the world. The ICT manufacturing industry in Taiwan focuses on the assembly and manufacture of products such as PCs and mobile phones, and in 2010 the sector generated revenue of US$220 billion. The second largest industry is the optoelectronics industry, which focuses on manufacturing products for display panels generated US$53.2 billion in 2010⁵⁴.