ICT Sector in 2024 : risks, opportunities, and Africa’s emergence
Coface's 2024 report on Information and Communication Technologies (ICT) highlights the major risks and opportunities facing the sector. Between geopolitical tensions, technological advancements, and challenges in managing supply chains, the industry finds itself at a crossroads. Africa, meanwhile, is emerging as a promising market in this ever-evolving landscape.
By the Editorial staff
The latest report from Coface sheds light on the key risks and opportunities characterizing the Information and Communication Technologies (ICT) sector in 2024. With an industry in constant flux, this analysis underscores the importance of navigating a complex environment, marked by both geopolitical tensions and technological breakthroughs.
An industry at a crossroads
The report begins by noting that the ICT sector is at a turning point. Rapid progress in fields like Artificial Intelligence (AI) and 5G is driving growth, but many challenges remain. The rise of generative AI, illustrated by the launch of ChatGPT in November 2022, has sparked increased interest in these technologies and is expected to encourage significant investments in 2024. However, this technology, though innovative, is energy-intensive and computing-power-hungry, and its adoption may be slowed if it fails to meet the high expectations of the market.
Furthermore, demand for devices like PCs and smartphones could rise alongside AI’s evolution, prompting start-ups and large tech companies to engage in an innovation race. However, this excitement is accompanied by increased competitive pressure and a search for profitability that could intensify difficulties.
Geopolitical risks: A Growing threat
One of the key points of the report is the growing exposure of ICT to geopolitical risks. The sector is at the heart of tensions between the United States and China, with significant repercussions on global companies. Recent American measures aimed at restricting access to Chinese technologies, including the TikTok ban unless sold by ByteDance, exemplify the impacts of this rivalry. In response, China has imposed export restrictions on metals essential for semiconductor production, a technology at the core of the economic war between the two powers.
Companies in the sector must also navigate an increasingly restrictive regulatory environment, with greater attention to areas such as data protection, taxation, and the management of trade agreements. The report highlights the enforcement of the European AI law in December 2023, as well as a similar U.S. ordinance in October 2023, aimed at better regulating the use of these technologies.
A Conditional recovery
While the ICT sector suffered a slowdown in 2022, particularly in advertising revenues and consumer spending, Coface highlights a notable rebound in the second half of 2023. Tech giants like Google and Meta have seen their digital advertising revenues pick up, while demand for semiconductors, in particular, is expected to continue growing in 2024.
The report also emphasizes the persistence of saturated demand in certain market segments and fierce competition. Despite the recovery, the sector remains vulnerable to global economic fluctuations and unpredictable political decisions.
Supply chain risk management
The Coface report stresses the need for ICT companies to better anticipate and manage risks related to their supply chains. The increasing complexity of these chains, often spread across multiple countries and supplier levels, makes their management particularly challenging. Natural disasters, cybersecurity breaches, and trade tensions can cause unexpected disruptions.
Coface cites the example of Dell and Lenovo, which share a large number of suppliers, illustrating the strong interdependence between companies in the sector. This interdependence can weaken supply chains and expose companies to significant risks in the event of disruptions.
Africa: An emerging opportunity for the ICT sector
The Coface report also highlights Africa, which represents a rapidly growing market for the ICT sector. Improved access to mobile phones and broadband, supported by growing investments in digital infrastructure, is opening new opportunities for tech companies. The deployment of 5G in some African countries and the accelerated digital transformation across the continent are boosting demand for innovative solutions in communication, cloud computing, and artificial intelligence. However, these opportunities come with challenges, particularly in terms of infrastructure, cybersecurity, and regulatory frameworks. ICT companies must therefore adapt to a complex and often heterogeneous environment to maximize the opportunities Africa offers while mitigating risks.
Balancing innovation and risks
In conclusion, Coface’s report outlines a dynamic but fragile ICT sector. Innovation, particularly in AI and 5G, will continue to drive growth in 2024, but companies must balance these technological advances with careful risk management, whether they be geopolitical, regulatory, or supply chain-related.
Thus, to take advantage of opportunities while managing risks, ICT companies must invest in resilience strategies and equip themselves with the necessary information to make informed decisions. The coming years will be crucial for those who can successfully navigate the balance between innovation and uncertainty.
