The South African book market continues to face a number of limitations in the wake of the high illiteracy rate and low incomes, coupled with the challenge of publishing books in multiple languages which effectively excludes large segments of the population from reading.
Books in South Africa are subject to value added tax (VAT) at 14%, which is higher than in most countries and this has contributed to the high retail prices that tend to make books out of the reach of the majority of consumers. As a result, consumers are more likely to read newspapers and magazines.
In addition, millions of South Africans live in places where books are not readily available. According to the South African Booksellers’ Association, there are about 1 600 bookshops in South Africa. About one-third of these are situated in rural areas.
These are some of the findings of PwC’s recent report entitled South African Entertainment & Media Outlook 2013 – 2017. The fourth edition of The Outlook presents annual historical data for 2008-2012 and provides annual forecasts for 2013-2017 in 12 entertainment and media segments. This year, for the first time, The Outlook includes detailed information for Nigeria and Kenya in each of the 12 industry segments.
Vicki Myburgh, Entertainment & Media Industries leader for PwC Southern Africa, says: “Illiteracy continues to be relatively high in South Africa. The Government is taking steps to address this as part of its Industrial Policy Action Plan, with the goal of eliminating illiteracy by the end of the decade.”
There are also other initiatives in place to encourage the reading of books in the market. For instance, Ambassador of Arts and Culture, Tebogo Ditshego, founded the Read a Book Foundation to encourage South Africans to read one book a month. The FunDza Literacy Trust launched Cover2Cover Books with the aim of improving literacy among teenagers by publishing teen fiction.
The South African Book Development Council estimates that about 51% of households in South Africa do not have a single book in their homes, with only 1% of the population buying books and only 14% of the population reading books. Consequently, the consumer book market is smaller than the educational book market.
The South African consumer and educational book market has experienced a decline in recent years, falling from R4,1-billion in 2008 to R3,6-billion in 2012, according to The Outlook. However, with a rise in the sale of consumer books, assisted by a general increase in living standards, the decline will not continue, and revenues are projected to remain in the region of R3,6-billion from 2013 to 2016 and reach R3,7-billion in 2017.
The decline in spending on educational books from R2,8-billion in 2008 to R2,2-billion in 2012 placed a strain on the total market. The total spend on consumer books fell slightly in both 2009 and in 2010, but this has been on the increase since 2011. This segment of the market is forecast to grow at a compound annual growth rate (CAGR) of 2,5% to reach R1,6-billion in 2017, up from R1,4-billion in 2012.
In 2008, spending on educational books was R2,8-billion. By 2012 spending had fallen to R2,2-billion and is forecast to fall by a negative CAGR of 1,1% over the next five years, generating revenues of R2,1-billion in 2017.
The Department of Basic Education’s Accelerated Schools Infrastructure Development Initiative encourages a higher proportion of schools’ budgets to be spent on textbooks and basic facilities such as desks and libraries. Despite R2,2-billion being spent on educational books in 2012, challenges still take place in the market. Getting text books to the class room remains a major challenge.
Publishers estimate that 30% of all course-related materials are photocopies with students copying content mainly because they have not received the books, or simply because they cannot afford them.
There are a number of initiatives in place promoting electronic reading such as, M4Lit (mobile phones for literacy) a pilot project creating a mobile novel and publishing it on a mobisite and on MXit in order to explore ways of supporting leisure reading and writing using mobile media.
A number of local e-commerce services have become established in South Africa that sell both physical and e-books online. However, the cost of e-readers and bandwidth constraints make the downloading of books difficult in some areas. This has resulted in e-book and e-reader penetration being lower in South Africa compared with many other markets in Europe, the Middle East and Africa (EMEA), says Myburgh.
For publishers, there are also concerns about the lack of clear policy around digital copyrights. Currently South African legislation is not in line with the World Intellectual Property Organisation’s Copyright Treaty (WCT), which protects investments in digital media.
The National Treasury has also proposed legislation that with effect from January 2014, non-South African suppliers of e-commerce services (for example, electronic books, music and programmes) will be required to register as VAT vendors in the country for output tax on its supplies to South African residents.
The books market in Nigeria is showing signs of maturity after rapid growth in 2010 (14,4%) and 2011 (12,4%) and a drop of 6,5% in 2012. It is projected to stabilise, generating revenues in the region of $22-million a year throughout the next five years.
Consumer books largely dominate the market. Electronic formats are forecast to make headway in the country and will account for 7,7% of market revenues by 2017.
Authors and publishers face the challenge of piracy in the Nigerian book market. Measures are being taken to deal with the issue. A further problem for the book market is the issue of royalty payments to authors being paid late and the authors being required to market their books themselves.
The educational book market is in a poor state with more than 70% of enrolled pupils in Nigeria not having textbooks. Furthermore, the sale of e-books is hindered by the low penetration of broadband across the country with just 5% of households having fixed broadband access in 2013.
The books market in Kenya is showing signs of maturity after rapid revenue growth in 2010 (7,7%) and 2011 (17,1%), followed by a drop of 6,5% in 2012. Annual revenues are forecast to stabilise, remaining in the region of $37-million throughout the next five years.
Kenyan booksellers received a boost in November 2011 following an agreement with donors to enlarge the country’s free learning programme, ensuring wider distribution of printed books.
Piracy of physical books is also a problem in Kenya with booksellers offered titles at up to 50% lower than the official price. E-books could be a solution to piracy for publishers, but the cost of e-readers has hindered adoption of the format in the country.
Myburgh concludes: “The impact of e-books on the overall South African market is expected to remain limited in the next five years, according to our research. Printed books will continue to dominate the consumer and educational publishing market for some years, but e-books and other digital products present a new way to the market.
