Sector Skills Plan 2016 to 2021 3 August 2015 - PDF4PRO
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Sector Skills Plan 2016 to 2021 3 August 2015
Foreword
South Africa is coming to the end of the third phase of its National Skills Development
Strategy (NSDSIII). The MICT SETA Sector Skills Plan (SSP) provides a clear path towards
achieving the skills development objectives of the MICT sector. This annual update of the
SSP continues to keep track of progress against the initial plan (2011 -2016) and keeps view
of the changing context in which the initial targets begin to shift and change.
The need for technical, professional and management skills is clearly identified. MICT SETA
will work together with employers, providers, government and the community to channel
appropriate resources into creating the pool of talent that will meet the need. Integrating
this skills plan into MICT SETA’s business plan and the business plan of its partners will
provide the formula for success.
The combined efforts from all stakeholders to produce this document are gratefully
acknowledged. The following deserves special mention:
− The Ministerial representatives on MICT SETA’s Board
− Industry, via representation on MICT SETA’s Board
− Organised Labour, through representation on MICT SETA’s Board
Our thanks go to all the stakeholders whose collective wisdom has been incorporated into
this document. Sharing of knowledge is the catalyst for achieving South Africa’s skills
development potential and economic growth.
Oupa Mopaki
CEO: MICT SETA
Johannes Mjwara
Chairperson: MICT SETA Board
1
Acronyms
Abbreviation Description
ACSSE Academy of Computer Science and Software Engineering
ATR Annual Training Report
BBBEE Broad-Based Black Economic Empowerment
BEE Black Economic Empowerment
BMI Business Monitor International
CAGR Compound Annual Growth Rate
CECS Centre of Excellence in Cyber Security
CSIR Council for Scientific and Industrial Research
CWU Communications Workers Union
DoC The Department of Communications
DHET Department of Higher Education and Training
DTI Department of Trade and Industry
DTPS Department Of Telecommunications and Postal Services
DTT Digital Terrestrial Television
EE Employment Equity
ETQA Education and Training Quality Assurance
FET Further Education and Training (Institution)
FPB Film and Publication Board
GDP Gross Domestic Product
HEMIS Higher Education Management Information System
HET Higher Education and Training (Institution)
HRDSSA Human Resource Development Strategy of South Africa
HSRC Human Sciences Research Council
ICASA The Independent Communications Authority of South Africa
ICT Information and Communication Technology
IPAP Industrial Policy Action Plan
ISOE Institute of Sectoral and Occupational Excellence
IT Information Technology
ITA Information Technology Association
IITPSA Institute of Information Technology Professionals South Africa
JCSE Johannesburg Centre for Software Engineering
MDDA Media Development and Diversity Agency
(MEA) Middle East and Africa
AfriMEA)
MICT Media, Information and Communication Technologies
NDP National Development Plan
NEMISA National Electronic Media Institute of South Africa
NQF National Qualifications Framework
NSA National Skills Authority
NSI National System of Innovation
NSDS National Skills Development Strategy
2
Abbreviation Description
NSF National Skills Fund
OFO Organising Framework for Occupations
On-line Grant System (the MICT SETA system for electronic capturing of
OGS
WSP and ATR data)
PC Personal Computer
PICC Presidential Infrastructure Coordinating Commission
QCTO Quality Council for Trades and Occupations
SABC South African Broadcasting Corporation
SAP Systems, Applications and Products
SAQA South African Qualifications Authority
SARB South Africa Reserve Bank
SDF Skills Development Facilitator
SDL Skills Development Levy
SETA Sector Education and Training Authority
SIC Standard Industrial Classification
SIP Strategic Integrated Projects
SITA State Information Technology Agency
SKA Square Kilometer Array
SME Small and Micro Enterprises
SMEs Small and Medium Enterprises
SSP Sector Skills Plan
StatsSA Statistics South Africa
STB Set Top Box
TV Television
TVET Technical Vocational Education and Training
UJ University of Johannesburg
USAASA Universal Service and Access Agency of South Africa
WIL Work Integrated Learning
WSP Workplace Skills Plan
3
Executive Summary
The MICT Sector Skills Plan (SSP) has been developed over the period of NSDS III in order to
map out and plan for the occupational skills needs in Advertising, Film and Electronic Media,
Electronics, Information Technology and Telecommunications. Each year it is updated to
analyse the changes in the sector’s labour market. It does so against the backdrop of the
economic performance of the sector and developmental agenda of the country. It sizes up
the gap between the demand and supply for skills and finally outlines strategies for dealing
with the identified challenges.
Sector Profile and Analysis
The five sub-sectors of the SETA are increasingly converging into a single ICT ecosystem – as
information, telecommunications, advertising and even film are streamed using similar
technologies.
The fortunes of the sub-sectors are, however, following different trends. While IT,
electronics and film are experiencing growth; advertising and telecoms have reached a
plateau.
There are over 23,000 employers in the sector of which about half are in the information
technology sub-sector. Small-sized employers constitute 96% of all employers in the sector.
Levy payers represent almost 22% of all employers (5978 companies) in the sector, a 13%
increase from 2014.
The number of employees in the sector is estimated at 805,000. The racial breakdown is
reflected as: 41% black, 38% white, 11% coloured and 10% Indian/Asian. Almost 40% of
employees are women.
The shift to electronic and digital media continues to have immense impact on the sector,
increasing the demand for expertise in ICT programming, mobile technology and cyber
security. Government’s Strategic Infrastructure Project (SIP-15) relating to “Expanding
Access to Communication Technology” is expected to drive demand for database and
network professionals as well as for specialist data scientists, able to deal with large
volumes of data.
Skills Demand, Supply and Scarcity
In 2015, the MICT sector employers are reporting a 6.29% labour need as a percentage of
total employment. This, against a weighted total employment figure of 805,034 implies
about 50,636 vacancies across the sector.
Of the 40 qualifications the MICT SETA has listed on the NQF, 24 have learners registered
against them. In 2014/15, there were 10,159 learners enrolled in learnerships, internships
and skills programmes, which are up from 6,001 in 2013/4. Between 2011 and 2014 there
has been an 83% achievement rate in learnerships and skills programmes.
A significant portion of total enrolment has been in the following five qualifications:
– Further Education and Training Certificate: Design Foundation(NQF4)
4– Further Education and Training Certificate: Information Technology: Technical
Support
– National Certificate: Information Technology: End User Computing
– National Certificate: Information Technology: Systems Development
– National Certificate: Information Technology: Systems Support
Vendor programmes continue to be popular choices for short-term training and upskilling.
To respond to the persistent demands for vendor certificates, the MICT SETA has started
mapping these programmes against the unit standards of existing NQF qualifications.
In addition, task teams have been set up to provide input to the occupational qualifications
being developed by the QCTO. A number of consultative road-shows were held to explain
the process followed to the adoption of a QCTO qualification. To date, the pre-scoping
sessions have been held with industry stakeholders to discuss the journalism qualification
and a producer qualification (for the film and TV industry).
A partnership has also been developed with Cape University of Technology to establish a
programme to address the articulation between a TVET course and higher education. The
first intake of 1000 learners into a TVET college for a Certificate in IT Service Management
(NQF level 5) is expected in 2016. The learners will be credited with 50% of the first year
course completed at a TVET college. Further articulation processes will be carried out with
other courses; with the aim of rolling this out across all TVETs and Universities of
Technology.
The MICT SETA is also supporting a number of Innovation Hubs, which are creative spaces
where people can meet, brainstorm and work on projects. These may become incubators
for research and development in the sector. The hub is also an environment in which skills
are learnt and exchanged across a number of disciplines.
With the Department of Higher Education and Training’s (DHET) increasing focus on
recapitalising TVET colleges, the MICT SETA is providing support through learnerships,
bursaries, work integrated learning and career guidance. Specific partnerships have been
established with Taletso, Tshwane North (Mamelodi Campus), Orbit, Mopane, Waterberg
and Vuselela colleges.
Sector Skills Priority Actions
In order to meet the skills challenges in the sector, MICT SETA intends to work on the
following objectives:
− Provide reliable labour market information and make data available in a useable
format to inform planning.
− Support the mapping of learning pathways for each of the scarce skills occupations.
These need to be communicated and explained to learners in schools, colleges and
universities as well as those already employed in the sector.
− Identification of relevant qualifications, or where these are not in place, the
development (via stakeholder processes led by the QCTO) of relevant qualifications.
5− Work with stakeholders in each sub-sector to set realistic training targets, assess
provision and access across provinces, regions, industries, occupations and different
size companies, and identify weaknesses.
− Partner with industry stakeholders and with public TVET colleges and universities to
enable much of this strategy to be implemented.
− Expand opportunities for Work Integrated Learning (WIL).
− Support companies seeking registration of vendor programmes to meet QCTO
and/or MICT SETA requirements and then register them as qualifications or skills
programmes.
− The Green Economy: Provide support to enable the research, establishment and
sustainability of green production methods and products.
− Identify and support initiatives to apply technology in a manner that supports an
expansion of employment for people with disabilities in the MICT sector.
− Address the challenge of cross-sectoral skills by facilitating inter-SETA discussions
and planning.
− Review the Grants Policies and Procedures to clarify access to grants.
− Strengthen project management capacity so that where gaps are identified in SSP
implementation there is the ability to design, establish and facilitate implementation
of specially designed projects.
6Table of Contents
Foreword ............................................................................................................................................ 1
Acronyms ........................................................................................................................................... 2
Executive Summary ........................................................................................................................ 4
List of Figures ................................................................................................................................... 8
List of Tables ..................................................................................................................................... 9
Chapter 1: Sector Profile ...................................................................................................... 10
1.1 Scope of coverage ........................................................................................................................10
1.2 Key role players ...........................................................................................................................12
1.3 Economic performance of the sector ...................................................................................14
1.4 Employer profile .........................................................................................................................20
1.5 Labour market profile ...............................................................................................................23
1.6 Conclusion .....................................................................................................................................28
Chapter 2: Key Skills Issues ................................................................................................. 30
2.1 Change drivers .............................................................................................................................30
2.2 Alignment with National Strategies and Plans .................................................................34
2.3 Conclusion .....................................................................................................................................38
Chapter 3: Extent of Skills Mismatches ........................................................................... 40
3.1 Extent and nature of demand .................................................................................................40
3.2 Extent and nature of supply ....................................................................................................45
3.3 Scarce skills and skills gaps.....................................................................................................56
3.4 Conclusion .....................................................................................................................................65
Chapter 4: Sector Partnerships .......................................................................................... 66
4.1 Partnerships to map vendor specific certificates against NQF levels ......................66
4.2 Institutes of Sectoral or Occupational Excellence (ISOE) .............................................67
4.3 Partnerships with TVET Colleges .................................................................................................68
4.4 University partnerships .................................................................................................................69
4.5 Research Partnership ................................................................................................................69
4.6 Future partnerships ...................................................................................................................69
4.7 Sector partnerships SWOT analysis .....................................................................................70
4.8 Conclusion .....................................................................................................................................71
Chapter 5: Skills Priority Actions ...................................................................................... 73
5.1 Findings from previous chapters .................................................................................................73
5.2 Recommended Actions..................................................................................................................74
Bibliography ................................................................................................................................... 77
7List of Figures
Figure 1: MICT SIC Code Demarcation ............................................................................................... 10
Figure 2: The MICT Sector Number of Employers per Sub-Sector ........................................................ 21
Figure 3: Levy contributors by Sub Sector .......................................................................................... 22
Figure 4: Employment across MICT core sectors ................................................................................ 24
Figure 5: Number of Employees by Sub Sector, 2010 to 2015 ............................................................. 25
Figure 7: Race Distribution of Employees .......................................................................................... 26
Figure 8: Gender Distribution of Employees ...................................................................................... 26
Figure 9: Disability distribution of Employees .................................................................................... 27
Figure 10: Age distribution of Employees .......................................................................................... 27
Figure 11: Occupations By Major Group ............................................................................................ 28
Figure 12: Factors Driving Sectoral and Skills Demand Change ........................................................... 30
Figure 13: Policies and plans impacting the MICT Sector .................................................................... 34
Figure 15: Proportion of Labour Need ............................................................................................... 40
Figure 16: Reasons for Labour Need .................................................................................................. 41
Figure 17: Demand for IT Jobs ........................................................................................................... 41
Figure 18: Enrolment by annual breakdown ...................................................................................... 46
Figure 19: Total population of enrolments ........................................................................................ 47
Figure 20: Learnerships and Skills Programmes Completions 2011-14................................................. 47
Figure 21: Learning programmes enrolments by NQF level ................................................................ 48
Figure 22: Top 5 Qualifications enrolled for ....................................................................................... 49
Figure 23: Provincial Distribution of Enrolments ................................................................................ 49
Figure 24: Equity Targets Achieved 2011/12 ...................................................................................... 50
Figure 25: Equity Targets Achieved 2012/2013 .................................................................................. 50
Figure 26: Equity Target Achieved 2013/2014 .................................................................................... 51
Figure 27: Enrolments and Achievements, by Sub-field and NQF Level (excluding Information
Technology and Communication Sciences), 2000 to 2015 ................................................................... 54
8List of Tables
Table 1: Advertising SWOT Analysis .................................................................................................. 15
Table 2: Film and Electronic Media SWOT Analysis ............................................................................ 16
Table 3: Electronics SWOT Analysis ................................................................................................... 17
Table 4: Information Technology SWOT Analysis ............................................................................... 18
Table 5: Telecoms SWOT Analysis ..................................................................................................... 19
Table 6: The MICT Sector Size of Employers per Sub-Sector................................................................ 21
Table 7: Levy paying employers by province ...................................................................................... 23
Table 8: Estimated Sector Employment ............................................................................................. 25
Table 9: Examples of salaries in the Advertising and Film & Electronic Media sub-sector .................... 42
Table 10: Examples of salary scales in the Electronics sub-sector ....................................................... 43
Table 11: Examples of salaries in the IT and Telecommunications sub-sectors .................................... 43
Table 12: NCV Headcount Enrolments 2014....................................................................................... 52
Table 13: Estimation of Advertising Scarce Skills Need Based on Levy Paying Employers ..................... 60
Table 14: Estimation of Film and Electronic Media Scarce Skills Need Based on Levy Paying
Employers ....................................................................................................................................... 61
Table 15: Estimation of Electronics Scarce Skills Need in a Pragmatic Scenario ............................... 62
Table 16: Estimation of Information Technology Scarce Skills Need Based on Levy Paying Employers
........................................................................................................................................................ 63
Table 17: Estimation of Telecoms Scarce Skills Need Based on Levy Paying Employers .................... 64
Table 18: Mapped Programmes ........................................................................................................ 67
Table 19: Institutions with an ISOE status.......................................................................................... 68
Table 20: MICT SETA Partnerships SWOT Analysis ............................................................................. 71
9Chapter 1: Sector Profile
1.1 Scope of coverage
The MICT sector is made up of five sub-sectors that are inter-related but also quite distinct
and identifiable in their own right. These are:
Advertising
Film and Electronic Media
Electronics
Information Technology
Telecommunications
The sector is anchored by the role of unified communications and the integration of
telecommunications, computers as well as necessary enterprise software, middleware,
storage, and audio-visual systems. Principally, the sector enables access, storage,
transmission, and manipulation of information (Murray, 2011).
Figure 1: MICT SIC Code Demarcation
Economy
Primary Secondary
Industries Industries Tertiary
Industries (6-9)
(1-2) (3-5)
Finance, insurance,
Transport, storage & Community, social &
Manufacturing (3) real estate & business
communication (7) personal services (9)
services (8)
Electrical machinery & Communiction Business Services (83- Other services
apparatus (361-366) (75) 88) (93-96)
SIC Codes: SIC Codes: SIC Codes: SIC Codes:
35791 75216, 75217, 88310, 88311, 96110, 96112,
75200, 75201, 88313, 86001, 96113, 96123,
75202, 75203, 86002, 86003, 96132, 96200,
75204, 75205, 86005, 86006, 96133, 96131
75209, 75211, 86007, 86008,
75212, 75213, 86009, 86011,
75214, 75215 88940, 86004,
86010, 86013,
86014, 87142,
87143, 87146,
87147, 86012,
87148
Sub-Sectors
Advertising Film & Electronic Electronics Information Tele-
Media Technology communication
s
10Table 1: The MICT SETA SIC Code Descriptor List
Sub-Sector SIC- Description
Code
Advertising 88310 Advertising
88311 Activities of Advertising Agents
88313 Commercial Design
Film and 96110 Motion Picture and Video Production and Distribution
Electronic 96112 Related Activities - Film and Tape Renting To Other Industries, Booking, Delivery and Storage
Media 96113 Film and Video Reproduction
96123 Bioscope Cafes
96132 Production and Broadcast of Radio and Television Broadcast Content
96200 News Agency Activities
88940 Photographic Activities
Electronics 35791 Manufacture of Alarm Systems
75216 Security Systems Services except Locksmiths
75217 Office Automation, Office Machinery and Equipment Rental Leasing including Installation and
Maintenance
86004 Electronic and Precision Equipment Repair and Maintenance Computer Maintenance and
Repairs
86010 Consumer Electronics Repair and Maintenance
86013 Other Electronic and Precision Equipment Repair and Maintenance
86014 Repair and Maintenance of Electronic Marine Equipment
87142 Research and Development of Electronic Equipment and Systems
87143 Import and Product Integration of Pre-Manufactured Electronic It and Telecommunications
Equipment
87146 Research and Development In The Physical and Engineering Sciences
87147 Electronics Importation and Product Integration of Pre-Manufactured Electronics It and
Telecommunications Equipment
96133 Installation, Maintenance and Repair of Tracking Devices For Cars
Information 86001 Software Publishers Prepacked Software
Technology 86002 Computer Systems Design and Related Services Computer Integrated Design
86003 Computer Facilities Management Services
86005 Computer Rental and Leasing
86006 Computer Programming Services
86007 Other Computer Related Activities
86008 Call Centre Systems Development and Installations Activities Call Centre and Customer
Relationship Management System Development
86009 Computer System Design Services and Integrated Solutions
86011 Computer and Office Machine Repair, Maintenance and Support Services
Telecommunic 75200 Telecommunication
ations 75201 Wired Telecommunication Carriers Telegraph
75202 Television Broadcasting, Television and Radio Signal Distribution Television and Radio Signal
Distribution
75203 Cable Networks and Programme Distribution Cable TV Services
75204 Telephone
75205 Wireless Telecommunication Carriers except Satellite Radiotelephone
75209 Television Broadcasting
75211 Telecommunications and Wired Telecommunication Carriers
75212 Paging
75213 Cellular and Other Wireless Telecommunications
75214 Satellite Telecommunications
75215 Other Telecommunications
86012 Communication Equipment Repair and Maintenance
87148 Telecommunications Importation and Product Integration of Pre-Manufactured Electronics It
and Telecommunications Equipment
96131 Providing Radio and Television Transmission Signals
11The MICT sector was demarcated in 2010 through Government Notice, No. 33756,
published in the Government Gazette, dated 11 November 2010. The notice lists and
defines the 46 MICT SETA Standard Industry Classification (SIC) Codes. The combination of
Media with ICT into an economic sector is unique to South Africa and does not follow
international conventions of industry classifications and this makes it complex to conduct
research at MICT level.
As demonstrated in the diagram above, the MICT sector is made up of SIC codes falling
under four different sub-industries, namely: manufacturing, transport, storage and
communication; finance, insurance, real estate and business services; as well as community,
social and personal services. This makes it difficult to obtain economic data relating to the
sector as the data has to be disaggregated and at times is not available at the requisite level
of disaggregation. That means unless economic data is available at the lowest SIC level,
MICT SETA might need to conduct some disaggregation of such data or empirical research
into the sector to obtain insights. Nonetheless, the sector consists of sub-sectors that are
varied but interconnected; the products and services provided in the sub-sectors are
complementary of one another.
1.2 Key role players
The last decade has been characterised by numerous policy interventions to reform the
MICT market in South Africa, in an attempt to meet the needs of a modern economy and a
transforming society. There are a number of bodies that contribute to the policy and
regulatory environment including industry and employer bodies, professional bodies and
regulatory bodies. These represent contesting forces at play – those seeking liberalisation
and those seeking regulation.
These include:
1.2.1 The Independent Communications Authority of South Africa (ICASA)
ICASA is the regulator for the South African communications, broadcasting and postal
services sector. ICASA was established by an Act of statute, the Independent
Communications Authority of South Africa Act of 2000, as amended. The Postal Services Act
for the regulation of the postal sector spells out ICASA’s mandate in the Electronic
Communications Act for the licensing and regulation of electronic communications and
broadcasting services. Enabling legislation also empowers ICASA to monitor licensee
compliance with license terms and conditions.
Broadcasting in South Africa is regulated by the Independent Communications Authority of
South Africa (ICASA), which issues broadcast licences; ensures universal service and access;
monitors the industry and enforces compliance with rules, regulations and policies; hears
disputes brought by industry or members of the public against licensees; plans, controls and
manages the frequency spectrum; and protects consumers from unfair business practices.
Additionally, the planning and management of radio frequency spectrum as well as the
protection of consumers of these services is conducted by ICASA.
121.2.2 The Institute of Information Technology Professionals South Africa (IITPSA)
Formerly the Computer Society South Africa (CSSA), IITPSA is a South African Qualifications
Authority (SAQA) recognised Professional Body for South Africa’s professional community of
ICT practitioners. IITPSA actively engages with commerce, industry and government in order
to influence policy formulation on behalf of both its own members and other stakeholders.
The Society also encourages the growth of professionalism and the responsible and
professional use of Information and Communications Technology throughout the South
African economy.
1.2.3 Department of Telecommunications and Postal Services
The Department interfaces with the telecommunications sub-sector in terms of providing
policy direction for the sector and has recently through its agency - the Universal Service
and Access Agency of South Africa (USAASA)-embarked on the Digital Terrestrial Television
(DTT)programme. The Department is responsible for the National Broadband Policy and has
recently coordinated the establishment of the National ICT Forum. The Department
together with the USAASA and Council for Scientific and Industrial Research (CSIR) are
driving Strategic Integrated Project (SIP 15) focussing on universal access to broadband.
1.2.4 The Department of Trade and Industry (DTI)
The DTI is the driver of industrial policy in South Africa and through the Industrial Policy
Action Plan (IPAP) plays a developmental role, particularly in the film and electronic media
sector where incentive packages are offered to film makers to encourage the development
of the film industry in South Africa.
In partnership with the CSIR, the DTI is offering industrial incentives to potential and
established manufacturers including those in electronics and ICT to encourage industrial
development and further investment.
1.2.5 The Department of Communications (DoC)
The Department has policy responsibility for the communications sector and their scope
covers Brand South Africa which manages South Africa’s brand internationally, the Media
Development and Diversity Agency (MDDA) which advances the development of media in
South Africa, as well as Film and Publications Board. The Department also has shareholder
control over the South African Broadcasting Corporation (SABC) a public broadcaster and
major player in the film and electronic media in the country.
1.2.6 Information Technology Association (ITA)
The ITA is a representative body for the local Information and Communication Technology
organisations. The main purpose of this body is to represent and foster the professional and
commercial interests of its members, who are employers active in the ICT Sector.
1.2.7 South African Communications Forum (SACF)
The SACF brings together the public sector, private sector and civil society organisations
with the goal of building partnership in bridging the digital divide and creating an
Information Society. SACF is currently conducting a Skills Audit of the telecoms industry.
131.3 Economic performance of the sector
Generally, the assessment from stakeholders is that economic growth in the MICT sector
has been stagnant. While film and electronic media has been vibrant, the other sub-sectors
have not performed as they might have been expected to. One concern is that consumer
growth is the main driver of growth rather than innovation and system development.
Interviews with stakeholders pointed to a number of factors behind the stagnant economic
performance, including: the general downturn in the global economy, the exchange rate,
policy delays (such as the roll-out in digital migration) and a lack of skills. The sector is
estimated to have a combined Gross Domestic Product (GDP) exceeding R 300 billion in
2013/4. In brief:
– South Africa’s advertising spend is expected to reach R 51 billion rand in 2015 up from
R 48 billion in 2014 (PwC, 2014).
– The Film and Electronic Media sub-sector is forecasted at R 41 billion in 2015 (ibid).
– The South African electronics sector is worth over R 70 billion. It is forecast to reach
R100 billion in 2018 (BMI, 2014).
– IT services spending will increase 10.5 percent year on year to hit R68 billion in 2015
and eventually reach R89 billion in 2018 (Ventures Africa, 2014).
– The telecommunications sector GDP at market prices is estimated at R 79 billion in
2013 (Qauntec, 2014).
1.3.1 Advertising
The South African advertising market generated revenues in excess of R4 billion in 2014
(PwC, 2014, p. 16). Market analysts at Frost & Sullivan predict that by 2025 global
online sales will represent 19% of all consumer purchases, worth a total of $4.3 billion
{(ISC)2, 2015 p. 26}. This means the consumer is fast changing their buying patterns.
According to research by Price Waterhouse Coopers (2015):
− The South African Internet advertising market is forecast to generate revenues of
R6.2 billion in 2018, up from R4.4 billion in 2013, a Compounded Annual Growth
Rate (CAGR) of 22.7%.
− Display advertising will grow at a CAGR of 18.8%, driven principally by the second
most visited site, Facebook, while video advertising will grow substantially from a
very low base of R2 million in 2013 to reach R9 million in 2018.
− Radio advertising, the third-fastest growing segment, will enjoy a healthy CAGR of
8.2% thanks to radio still being widely consumed throughout South Africa.
− TV advertising remains comfortably the largest South African advertising sector. It
will grow at a CAGR of 6.8% over the forecast period, reaching a projected R18.4
billion in 2018.
− Magazine and newspaper total advertising revenues will show growth of 4.0% and
6.0% respectively, and in both cases the advertising spend from printed editions will
consume the overwhelming majority of total advertising revenues.
Online electronic marketing and advertising has shown rapid growth over the past decade;
currently accounting for over 25% of the total advertising revenues. With this growth, the
concomitant need is to fast-track the supply of IT skills, inter- and intranet marketing and
advertising, and marketing strategies aimed at techno-savvy youth.
14The marketing of small and medium businesses effectively through the use of cheaper
mediums such as mobile telephones and the internet is another example of how new forms
of technology promote increased usage and creates a new skills demand within this sector.
Sector stakeholders are confident of South Africa’s quality standards, as well as the
capabilities and skills to produce adverts at competitive costs. However, potential threats
for industry growth are the penetration of multi-nationals and local labour costs, which
makes it cheaper to produce a commercial in places like Miami and China than in South
Africa. The following table profiles the sub-sector in terms of its internal strengths and
weaknesses as well as external threats and opportunities (SWOT).
Table 2: Advertising SWOT Analysis
Strengths Weaknesses
– International competitiveness, with a growing – Skills gaps hamper quality of content produced
number of international agencies – Print losing traction to digital platforms
– Strong performance, supported by solid growth in – Competition for limited financing
revenues – Market access a challenge for small
– Developments in IT infrastructure continue to drive enterprises
digitisation
– Increasing pull of technical skills
– Strong institutions setup by industry bodies
– Quality standards being maintained
Opportunities Threats
– Rapid technological advances bolster quality of – International competition threat local firms,
work particularly small sized firms
– Internet advertising a great market opportunity – Susceptibility to economic pressures
– Mobile technology advertising – Exchange rate volatilities threaten revenues
– Gateway into the African market, as a content – Foreign content posing increasing competition
producer – International perceptions about quality and
– Public service advertising a growing market standards
– Reduced government support
Source: Business Monitor International, 2014
1.3.2 Film and Electronic Media
South Africa has a vibrant, growing film industry that is increasingly competitive
internationally. Local and foreign filmmakers are taking advantage of the country's diverse
and unique locations – as well as low production costs and favourable exchange rate, which
make it up to 40% cheaper to make a movie in South Africa than in Europe or the US and up
to 20% cheaper than in Australia. Although South Africa's contribution to global output
stands at a mere 0.4%, the local film industry is gradually attaining a global footprint.
The film and electronic media market represents a 33.7% share of the total entertainment
and media revenue in 2014 (PwC, 2014). Over the next five years, the demand for digital
experiences will increase and become the norm. The expectation is that the television
sector spend will reach the R34 billion mark in 2015, before pushing on past R39 billion in
2018, a CAGR increase of 5.2% over the forecast period of 2014 to 2018. The steady growth
is attributed to the continued growth in subscription spending and steady growth in
advertising. The table below provides the sub-sector’s SWOT analysis.
15Table 3: Film and Electronic Media SWOT Analysis
Strengths Weaknesses
– World-class skills base in the area of film – Skills gaps
production – Limited access to funding, distribution and
– Strong destination for film production facilitation facilities
– High mobile penetration leading to increasing – Small domestic market and limited audience
take up and consumption of electronic media development
– Increasing number and variety of new films on – Prices in the support industry not very competitive
the market – Lack of community support for film shoots
– Quality standards being maintained – Bureaucratic obstacles
– Growth sector – Lack of information and statistics regarding the
– Strong performance scope of the industry
– Decrease in the cost of start-up equipment has
lowered entry barriers in the film sector
Opportunities Threats
– Steady increase in the number of cinema – Loss of production opportunities due to
complexes, film festivals and DVD/video rental International competition from low cost countries
shops like Argentina, Spain, Portugal, Australia and Miami.
– Growth of satellite and digital technology – Exchange rate pressures eroding the
allows local independent filmmakers to target competitiveness of the local market
smaller niche markets – Content produced in other countries rendering local
– Opportunities for aspirant filmmakers, content less competitive
especially those from disadvantaged – International perceptions of crime in South Africa
backgrounds – Reduced tax breaks and financial incentives from
– increasing number of co-production treaties, government
incentive schemes and memorandums of
understanding with other countries
– Extremely lucrative to tourism industry as
linked with new feature film or television
production
Source: Business Monitor International, 2014
1.3.3 Electronics
South Africa is a global top-20 consumer electronics market and, despite economic
headwinds, will likely remain an attractive one for multinationals over the forecast period.
In addition to its large domestic market, South Africa has significance as a hub for the
growing sub-Saharan market. However, the Electronics sub-sector is subject to turbulent
economic conditions in the global electronics sector. Fierce competition in this sector
implies that South African employers cannot always compete with cheaper imports,
mainly from Asia.
The South African electronics industry is currently estimated to have a market of about US$
10 billion and is forecasted to reach US$ 13.2 billion by 2017 (BMI, 2013). While the
Electronics sub-sector is expected to continue to experience growth over the medium term,
seasonally adjusted manufacturing production and sales for the electronics sub-sector
experienced a 0.1% dip between March 2014 and March 2015 (StatsSA, 2015).
16However, overall manufacturing experienced a 3,8% year-on-year increase in manufacturing
production. South Africa’s consumer electronics market – alone – accounts for 11.1% of the
Middle East and Africa (MEA) consumer electronics market value and is expected to reach a
$1.14 billion in 2018, an increase of 8.3% since 2013, at an annual CAGR of 1.6%
(MarketLine, 2014, p. 7).
The main gap in South Africa's consumer electronics portfolio is mobile handsets, with very
little local production. The challenge for local TV or PC brands is to add value and build a
channel capable of cultivating brand loyalty and offering acceptable service levels. The
deficiencies of local competition with respect to multinational products are more in the
areas of branding, service, warranty and logistics. The table below provides the sub-sector’s
SWOT analysis.
Table 4: Electronics SWOT Analysis
Strengths Weaknesses
– The largest consumer electronics market in – Lack of infrastructure in rural areas limiting
Africa market development
– A gateway into the rest of Africa and a major – Regionalised market due to the lack of
supplier of electronic products to intercity connectivity and infrastructure in
neighbouring countries such as Botswana parts of the country
– Sophisticated consumers that are well – High communication costs constraining
informed about latest trends growth
– Youthful demographics and rising incomes – Relative saturation in some segments,
ensuring increased demand for products although there is still some room for organic
– A mix of local and global brand presence growth. Mobile penetration has surpassed
– A very strong vehicle security industry that is 100%, while household TV penetration is also
internationally acclaimed close to 100%
Opportunities Threats
– Television digital migration will boost – Fierce international competition could
demand for set-top boxes render South African manufacturer
– Increased demand for mobility, lower prices uncompetitive
and channel expansion will fuel demand for – The market will remain highly price sensitive
notebook computers – Failure to control parallel imports
– Mobile handset sales will be driven by new
technologies such as HSDPA and 3G, and
new services such as mobile banking and
mobile TV
– The national and local governments will be
important drivers of PC demand
Source: Business Monitor International, 2014
1.3.4 Information Technology (IT)
South Africa has a mature IT industry characterised by world-class organisations and
services driven by consumer-centric sectors of the economy and large government projects.
Several international corporates recognised as leaders in the IT sector, operate subsidiaries
from South Africa. These include IBM, Unisys, Microsoft, Intel, Systems Applications and
Products (SAP), Dell, Novell and Compaq. It is estimated that in 2014, spend on IT for the
country totalled over R 100 billion; as a result South Africa is ranked 33rd in the latest Global
Connectivity Index (Huawei, 2015, p. 25).
17The 2013-2017 South African IT market’s CAGR is projected to be in the region of 8%, as a
number of major IT infrastructure projects generate spending at provincial level.
Furthermore, a significant improvement in the country's broadband infrastructure,
following investments in submarine and terrestrial fibre-optic networks, is expected to be
an important driver of spending across all IT market segments (BMI, 2013).
A number of factors should serve to keep South Africa's IT market on a positive growth
trajectory. In particular, a wave of public infrastructure projects with IT dimensions should
continue to be launched. At the same time, there are concerns that government’s approach
to ICT is fragmented and that the national ICT policy has not been firmly implemented.
There are also worries over government’s poor management of procurement. The
Transport Department, for example, does not have an effective Traffic Information System
(eNATIS) but it is not able to procure one. The billing system in the Johannesburg
Metropolitan is another example where ICT systems appear to have failed. A project that
seemed positive at its inception was the Gauteng Department of Education’s distribution of
about 88,000 tablets to learners, but this too had set-backs as a result of large-scale theft of
the equipment and lack of participation by teachers.
The table below provides the sub-sector’s SWOT analysis.
Table 5: Information Technology SWOT Analysis
Strengths Weaknesses
– Largest market in Africa. – Domestic market remains highly price
– Regional hub as supply base for sensitive and dependent on government
neighbouring countries. spending
– Free trade policies and tax incentives – Poor IT infrastructure outside major urban
areas
– Shortage of skilled IT workforce
– Continued uncertainty over the
government's ICT policy
Opportunities Threats
– Reduction or scrapping of import duties on – Muted domestic economic growth
many classes of computers – The South African economy is vulnerable to
– Improved capital expenditure on IT global economic shocks
infrastructure – Weakening currency poses downside risks to
– Security products market showing growth. sales of imported products and services
– Government IT project
– Strong private investment in key industry
verticals, including retail, manufacturing and
mining
Source: Business Monitor International, 2014
1.3.5 Telecommunications
The Telecommunications sub-sector has three categories, which are mobile, fixed line and
Internet. The Internet category can further be broken down into wireless broadband
(3G/4G) and fixed line Internet.
18Given South Africa's relatively saturated mobile market, at 134.9% penetration, operator
growth will increasingly be driven by moving existing subscribers to new products, rather
than capturing new connections. Subscriber growth will remain important over the short-to-
medium term but long-term expansion will be focused on next generation technologies.
Although the number of mobile subscribers has increased, this has been at the expense of
fixed line communications, with the exception of subscribers interested in fixed line Internet
service being forced to acquire a fixed line telephone service.
According to research conducted by Price Waterhouse Coopers into the South African
market, consumer spending on Internet access in South Africa will reach approximately
R59.6 billion by 2017, up from R19.8 billion in 2012, a CAGR of 24.7%. The South African
Internet market is dominated by the mobile segment due to increased investment in cellular
coverage by mobile operators and decreasing tariffs. Internet access via mobile devices
comprised 89% of the Internet access market (mobile Internet subscribers plus fixed
broadband households) and 81% of its revenues in 2012. Within the home broadband
market, which will grow its subscriber base by a CAGR of 8.6% over the next five years,
asymmetric digital subscriber line (ADSL) will be the dominant technology due to demand
for higher speeds and its relatively wide coverage.
The table below provides the sub-sector’s SWOT analysis.
Table 6: Telecoms SWOT Analysis
Strengths Weaknesses
Fixed Line Fixed Line
– Competition exists in the fixed voice services – Fixed-line connections and revenue are in
market, with several companies providing decline
call-by-call carrier selection and VoIP services – The sector has yet to benefit from the
– Multiple companies are licensed to provide introduction of local loop unbundling, with
broadband WiMAX services the first stage of implementation continually
Mobile delayed by the regulator
– Competitive sector with four network – Telkom's ADSL network has been heavily
operators criticised for being expensive and unreliable
– Leading operators have a strong international Mobile
presence, bringing international expertise and – Fierce price competition resulting in low
best practice into the sector margins and loss of jobs across the sector
– Broadband services are offered by all of the – South Africa's telecoms regulator, ICASA, has
network operators been criticised for not doing enough to help
– Faster Long Term Evolution (LTE) network liberalise the market; tariffs remain high by
rollouts began in 2012 international standards
– Leading operators are able to offer converged – Regulator accused of not releasing spectrum
service packages required for high speed broadband internet
connectivity
Opportunities Threats
Fixed Line Fixed Line
– Deployment of Telkom's Next Generation – Danger that slower economic growth in South
Network (NGN), and the construction of a Africa will have a negative long-term impact
national fibre backbone by Neotel, MTN and on the uptake of broadband and data services
Vodacom, will help to support the by businesses and consumers
development of new services such as Internet – Telkom is investing in a range of new services
TV and video calling including fixed wireless telephony, VoIP and
– Greater access to undersea cable systems will fibre optics; such investments could make it
19Strengths Weaknesses
help to further lower international bandwidth harder for market competition to develop
costs for South African operators
– An increasing number of service providers are
entering the market for corporate data Mobile
solutions and managed data services, pointing – Mobile market appears to be approaching
to a segment with considerable growth saturation point, limiting the potential for
potential new customer growth
– The introduction of fixed number portability – High-speed (LTE) growth likely to be limited
between fixed line operators due to low availability of spectrum
Mobile – Danger of some operators being squeezed out
– Leading operators have been actively of market due to price competition.
deploying multimedia content services,
providing opportunities for content providers
– Operators launching high-speed networks and
continuing to expand nationwide
– LTE launches offer chances to reach clients
with a wider range of services and products,
building long-term revenue potential
– Deployment of high speed Internet and the
launch of new multimedia mobile handsets
should have a positive impact on data service
usage
– Deployment of fibre networks by leading
operators will enable these operators to offer
a broader suite of converged services
Source: Business Monitor International, 2014
1.4 Employer profile
The MICT SETA works with companies located in the sector – i.e. those whose core business
is Media or Information and Communication Technology – to develop skills intervention to
meet their skills needs. However, it needs to be noted that there are ICT skills needs
throughout the economy and when doing research into supply and demand and developing
supply side strategies, the SETA is required to take these into account in its plans. The MICT
sector is made up of over 23,000 companies spread across the five sub-sectors. Nearly 50%
of the sector employer base is constituted by organisations in the Information Technology
sub-sector, followed by Electronics at 12% and Advertising with 11%; while the Film and
Electronic Media and Telecoms sub-sectors represent 10% and 9% respectively. The
database of employers in the sector reflects over 2,249 employers (9%) who are not
allocated into a particular sub-sector in the database standard industrial classification (SIC)
codes. This could be attributed to employers who are operating in more than one sub-
sector.
20Figure 2: The MICT Sector Number of Employers per Sub-Sector
Source: South African Revenue Service database of employers in MICT sector, 2015
There has been a 16% increase from 2014 in the employer base for the sector. However,
this has almost exclusively been amongst small sized employers. Small sized employers
constitute 96% of all employers in the sector. Medium to large sized employer base have
increased by 3% from 2014.
Table 7: The MICT Sector Size of Employers per Sub-Sector
Sub Sector Small (0-49) Medium (50-149) Large (150+) Grand Total
Advertising 2430 38 14 2482
Electronics 2664 101 70 2835
Film and Electronic Media 2236 43 40 2319
Information Technology 10860 303 154 11317
Telecommunications 1895 82 45 2022
Unknown 2218 25 6 2249
Grand Total 22303 592 329 23224
Source: The MICT SETA OGS, 2015
The vast majority of employers are located in the industrialised provinces of the country.
Gauteng has the largest share of employers at 42%, followed by Western Cape and Kwazulu-
Natal with 9% each. The remainder of the provinces have a ±1% representation each.
The trend of an employer base that is concentrated in more industrialised provinces is
common across all employer sizes; however, employers in the less industrialised areas are
predominantly small.
211.4.1 Levy paying employers
Levy payers represent almost 22% of all employers (23,224) in the sector. Amongst those
paying levies, the highest total value was received from the Information Technology sub-
sector (41%), followed by Telecommunications (30%). The Advertising sub-sector was the
least contributor representing only 5% of all levies received.
Overall, the number of levy paying employers has increased by 13% in 2015 (5078
employers), up from 4491 employers the previous year. More employers have been
included as levy payers because although wages have increased, the R500, 000 threshold
has not been changed in many years. (The levy is based on 1% of employee earnings.)
Figure 3: Levy contributors by Sub Sector
Source: The MICT SETA OGS, 2014
Whereas in the 2014/15 financial year the Electronics sub-sector experienced a 32% decline
in levy paying employers, it has reversed the trend with a 10% gain in 2014/15. However,
the sub-sector has not recovered to the 2013/14 levels. The exponential increase (114%)
experienced by the Film and Electronic Media sub-sector in the previous financial year has
subsided to 4, 7% in 2014/15. Significant movement was however experienced in the
Telecoms sub-sector, with levy paying employers increasing by 19, 5% in 2014/15.
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