Despite significant progress in various sectors, digital platforms still face substantial untapped opportunities for growth and innovation. As digital transformation accelerates and the market evolves, emerging prospects present considerable potential for new and advanced B2C and B2B platforms.
A research report by Naspers and the Mapungubwe Institute for Strategic Reflection (MISTRA) highlights the unexplored potential of South Africa’s digital platform economy, which includes online platforms facilitating economic transactions.
The report suggests that South Africa and the broader African continent are poised to unlock considerable value, especially in areas like virtual gaming.
According to the report, gaming platforms have already outpaced music, movies, and streaming in revenue, revealing a significant opportunity for African innovation.
The continent’s rich animation talent offers a unique chance to develop and market African-themed virtual games globally.
Furthermore, the report identifies B2B crowdfunding and liquidity solutions as ripe for exploration, offering substantial potential for new business models and advancing digital transformation.
By leveraging these opportunities, South Africa could drive further economic growth and position itself as a leader in the global digital economy.
Untapped digital platforms opportunitiesGrowth constraints and challenges
South Africa’s digital platform economy is bolstered by a robust ecosystem with significant growth potential, according to the report.
Currently, the focus has primarily been on platforms targeting affluent and urban markets, providing a strong foundation for future expansion.
“By leveraging this existing ecosystem, there is an opportunity to extend the reach of digital platforms to diverse demographics and regions. Embracing this broader vision can foster inclusive growth and enhance the overall impact of the digital economy across South Africa.
“Despite notable advancements in digital infrastructure, disparities persist between urban and rural communities in terms of affordability and accessibility.”
Research by Nagendra et al. (2012) indicates that rural areas face challenges related to formal education and digital skills, while high costs for mobile devices and technology exacerbate the digital divide. Marginalized groups encounter greater barriers to accessing necessary devices and skills compared to their more privileged counterparts (Carla et al., 2021), impacting the number of customers and business users engaging with digital platforms.
The reported stated that there is an urgent need for initiatives aimed at bridging this rural-urban digital divide to ensure equal opportunities for entrepreneurs.
Additional challenges specific to South Africa’s digital platform market include:
- Racial diversity and inclusion in digital platform startups. Many reviewed platforms are male and white-dominated. The Competition Commission reports that out of R780 million in funding from Naspers Foundry, only 13% of the 23 funded founders were black and 8% were women, highlighting significant gender diversity issues.
- Market saturation due to the rapid growth of digital platforms in limited categories.
- An ecosystem dominated by major players and venture capitalists who often incubate small platforms with the intent of acquiring them (early exit).
- A lack of responsiveness from digital platforms to the developmental needs of customers and value-chain participants.
- Limited discoverability of digital platform startups undermining their intermediation function.
- The predominance of cash transactions in rural and township economies, reinforced by the growth of shopping malls which support in-store shopping.
Also read: Digital Platform Economy Could Boost SA By R91.4 Billion By 2035
