African economy anticipates greater internet penetration in three years
By Jeph Ajobaju, Chief Copy Editor
About $180 billion is expected to be pumped into the African economy from internet activity by 2025, a forecast by e-Conomy Africa 2020 Report by the International Finance Corporation (IFC), an arm of the World Bank.
The yield may reach $712 billion by 2050.
Africa’s internet economy is one of the largest in the world, says the report, which adds that although the continent is often overlooked, investment in the past decade is expected to have a huge impact on its development.
The report shows that internet access in Africa has grown to over 520 million people, about 40 per cent of the population, and 60 per cent of the internet population accesses the web through mobile devices.
Increasing internet access to 75 per cent would create 44 million jobs on the continent, according to the report, saying the internet has become the lifeblood of many industries in Africa and elsewhere.
Entities including Fintechs, e-commerce, logistics, transportation, healthtech now depend on the internet to deliver competitive services to 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 IFC said.
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Digital connectivity fosters growth
Nairametrics quoted the IFC as saying that a 10 per cent increase in mobile internet penetration increases Gross Domestic Product (GDP) per capita by 2.5 per cent in Africa, in contrast to 2 per cent globally.
A 10 per cent rise in digitisation, the conversion of information into a digital medium, lifts GDP per capita by 1.9 per cent in Africa against 1 per cent in countries not in the Economic Co-operation and Development (OECD).
GDP figures from the National Bureau of Statistics (NBS) show that the telecommunication sector in Nigeria grew significantly in 2020, facilitated by greater use of the internet compelled by pandemic lockdown.
Telecom contributed about 12 per cent to real GDP in 2020, estimated at N8.53 trillion, the third highest valued subsector after crop production and trade.
According to Nairametrics, increased connectivity presents an opportunity for businesses and communities to leapfrog with new technologies, paving the way for economic development.
By 2019, there were 144 mobile money operators across Africa, serving more than 469 million registered accounts with $1.25 billion daily transactions.
Fast forward to 2050
“Africa’s iGDP may have the long term potential to add $712 billion to the continent’s economy by 2050,” the IFC said.
“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 GDP – growth has been strong.”