Internet penetration could add $300bn to Africa’s GDP

THE application of the Internet has yet to reach the levels of economic impact in Africa that it has in other emerging and developed economies, but, over the next decade, it was expected to take hold on a much larger scale, McKinsey Global Institute said on Wednesday.

Following a decade of economic expansion, Africa was “going digital” and, if the impact of Internet penetration matched or exceeded the level of impact that had already been achieved by mobile telephony, the result could be a “leap forward” in Africa’s economic growth and development.

This was according to a new report by McKinsey, ‘Lions go digital: The Internet’s transformative potential in Africa’, which showed that the impact of the Internet could contribute some $300-billion to Africa’s gross domestic product (GDP) by 2025.

The report noted Africa was a continent in transition, with urbanisation and the rise of the middle‑class consumer fuelling growth.

Currently, 16% of the continent’s one-billion people were online, with more than 720-million Africans accessing the Internet through mobile phones – 67-million of them smartphones – and 167-million Internet users and 52-million Facebook users.

The current contribution of the Internet to the overall GDP of Africa was currently about $18-billion, or 1.1%.

This was expected to grow to between 5% and 6% of GDP, matching economies such as Taiwan, the UK and Sweden.

However, if the Internet had the same effect as mobile telephony in Africa, it could account for as much as 10% of total GDP by 2025.

Further, by 2025, Internet penetration would reach more than 50%, as mobile networks are built out and the cost of Internet-capable devices continues to fall, with Internet users rising to 600-million and smartphone distribution up to 360-million.

This would likely produce $75-billion in e-commerce sales and about $300-billion in productivity gains in key sectors.

“Evidence of what is to come can already be seen in Africa’s major cities, where consumers have disposable income, more than half of residents have Internet-capable devices, and third-generation networks are up and running,” the report said.Ambitious information and communication technology (ICT) infrastructure was being planned across the continent, including the expansion of undersea cable systems and new fourth-generation networks, with the pursuit of various governments’ Internet agendas and national ICT strategies – albeit still in the early stages of development and implementation.