Impact of South African Elections on IT Distributors: A Slow Start to the Year

Impact of South African Elections on IT Distributors: A Slow Start to the Year
it distribution market analysis security market intelligence

Impact of South African Elections on IT Distributors: A Slow Start to the Year

A political reckoning looms in South Africa, where the ANC will face its toughest battle yet to win a general election this year. Against this uncertain political backdrop and persistent macroeconomic headwinds, the IT channel continues to struggle. But there remain some bright spots.

A slow start to the year

South Africans go to the polls at the end of May in what could be a watershed election for the country. The ANC, which has ruled the nation for the entirety of the post–apartheid era, may get below 50% of the vote for the first time in 30 years. That may hand smaller parties an outsized role in who forms the next government. 

This political uncertainty comes at a time of persistent economic challenges. Inflation remains high (5.3%) and the IMF has raised concerns about the country’s debt–to–GDP ratio. The Reserve Bank (SARB) is predicting annual growth of just 1.2% for 2024. 

Against this backdrop, IT channel revenues have been declining since Q1 2022 thanks to unfavourable ZAR–US$ exchange rates, and high interest rates and inflation, which are depressing consumer and corporate demand and increasing the cost of imported goods. Although distributors and resellers continue to create new go–to–market toolsets, consumer and business channels started slower in Q1 than in the previous two years.

A few categories posted growth in Q1 2024 close to 2022 and 2023 Q1 figures – notably software, networking and disk storage. However, our outlook remains flat for Q2, with all eyes on the results of the elections.

CIOs focus on security

That’s not to say that channel activity is muted in South Africa right now. Cybersecurity in particular remains a top focus area for domestic CIOs, who are increasingly looking for anti–ransomware solutions spanning on–premises, public and private cloud environments.

Other notable news in the channel includes:

  • ASBIS has become only the second Apple distributor in South Africa after a long exclusive run by Core Group
  • QBS Technology acquired local cybersecurity distributor Maxtec, illustrating that global players are still keen to enter the South African market
  • Amazon Store has gone live in the country with a focus on local SMEs
  • Westcon Comstor and Palo Alto Networks deepened their relationship to help partners drive growth via the AWS Marketplace

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