The Internet economy has been projected to contribute about $180 billion to Africa’s economy by the year 2025. This is according to the e-Conomy Africa 2020 report, by the International Finance Corporation (IFC) of the World Bank.
The report highlighted that Africa’s internet economy is one of the largest, though overlooked, investment opportunities in the past decade, and has the potential to impact development in the region significantly.
According to the report, internet access in Africa has grown to over 520 million people, representing about 40% of the population, while 60% of the internet population accesses it through mobile devices. The report also opined that increasing internet access to 75% would create 44 million jobs in the continent.
Noteworthy is the fact that the internet has become the lifeblood of many industries on the continent and the world at large with fintechs, e-Commerce, logistics, transportation, healthtech among others now depending on the internet to deliver competitive services to their customers. “Although formal sector businesses (such as large corporations) have historically shaped the economy, the Internet economy offers leapfrog opportunities to address challenges faced by Africa’s fast-growing number of informal businesses and workers,” the report highlighted.
Increased digital connectivity fostering growth
According to the IFC, a 10% increase in mobile internet penetration increases GDP per capita by 2.5% in Africa, in contrast to 2% globally. Also, a 10% increase in digitization, the conversion of information into a digital medium, increases GDP per capita by 1.9% in Africa as opposed to 1% in non-organisation for Economic Co-operation and Development (OECD) countries.
A cursory look at the GDP figures from the National Bureau of Statistics (NBS) shows that the telecommunication sector in Nigeria grew significantly in 2020, characterised by the increased usage of the internet as a result of the lockdown measures by the Federal Government, in response to the Covid-19 pandemic.
The sector contributed about 12% to the real GDP in 2020, estimated at N8.53 trillion, representing the third-highest valued subsector only behind crop production and the trade sector.
Increased connectivity has presented an opportunity for businesses and communities to leapfrog with new technologies, paving the way for economic development. 144 mobile money services are available across Sub-Saharan Africa, serving more than 469 million registered accounts with daily transactions amounting to $1.25 billion by the end of 2019.
What they are saying
The report estimates that Africa’s internet GDP could add about $712 billion to the economy of the continent by 2050. Specifically, “Africa’s iGDP may have the long term potential to add $712 billion to the continent’s economy by 2050.”
“Market leaders are driving innovation in Africa across emerging verticals, such as fintech, healthtech, media and entertainment, e-mobility and food delivery, and B2B e-Logistics. Over the past decade, Africa’s Internet gross domestic product (iGDP) — defined as the Internet’s contribution to the GDP— growth has been strong,” the report also highlighted.