By Adedapo Adesanya
Google and the International Finance Corporation (IFC) have estimated that Africa’s Internet economy has the potential to reach 5.2 per cent of the continent’s gross domestic product (GDP) by 2025, contributing nearly $180 billion to its economy.
This, according to a new report, it says will depend greatly on the usage level of digital technologies by businesses and the right mix of policy actions, adding that projected potential contribution could reach $712 billion by 2050.
It explained that a combination of increased access to faster and better quality Internet connectivity, a rapidly expanding urban population, a growing tech talent pool, a vibrant startup ecosystem, and Africa’s commitment to creating the world’s largest single market under the African Continental Free Trade Area (AfCFTA) are some of the key factors driving this growth.
Currently, Africa is home to 700,000 developers and venture capital funding for startups has increased year-on-year for the past five years, with a record $2.02 billion in equity funding raised in 2019.
It was noted that 19 of the top 20 fastest-growing countries in the world are in Africa and with urbanization on the rise coupled with an increasingly young and educated population is driving higher consumption of online services
Digital startups in Africa are driving innovation in fast-growing sectors, including fintech, healthtech, media and entertainment, e-commerce, e-mobility, and e-logistics, contributing to Africa’s growing Internet gross domestic product (iGDP) — defined as the Internet’s contribution to the GDP.
According to Google Africa director, Mr Nitin Gajria, “Google and IFC have created this report to highlight the role the digital startup sector is playing and other factors driving the continent’s growth, in order to showcase and support the opportunities the continent presents.”
An analysis within the report, conducted by Accenture, found that in 2020, the continent’s iGDP may contribute approximately $115 billion to Africa’s $2.554 trillion GDP (4.5 per cent of total GDP). This is up from $99.7 billion (3.9 per cent of total GDP) in 2019, with the potential to grow as the continent’s economies develop.
Investments in infrastructure, consumption of digital services, public and private investment, and new government policies and regulations will play an important role in supporting Africa’s digital growth.
The report notes that investment in digital skills will also need to increase in order to help drive technology usage and continue to grow the continent’s talent pool.
Google’s mission is to organize the world’s information and make it universally accessible and useful. Through products and platforms like Search, Maps, Gmail, Android, Google Play, Chrome and YouTube, Google plays a meaningful role in the daily lives of billions of people and has become one of the most widely-known companies in the world. Google is a subsidiary of Alphabet Inc.
IFC, a member of the World Bank Group, is the largest global development institution focused on the private sector in emerging markets. It works in more than 100 countries, using capital, expertise, and influence to create markets and opportunities in developing countries.
In the fiscal year 2020, it has invested $22 billion in private companies and financial institutions in developing countries, leveraging the power of the private sector to end extreme poverty and boost shared prosperity.
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