Africa’s Internet economy has the potential of reaching $180 billion or 5.2 per cent of the continent’s Gross Domestic Product (GDP) by 2025, according to a new report, e-Conomy Africa 2020, released by Google and the International Finance Corporation (IFC).
Stephanie von Friedeburg, Interim Managing Director, Executive Vice President and Chief Operating Officer of IFC said in a statement that Africa’s Internet was likely to also contribute up to $712 billion to its economy by 2050.
She attributed this growth to 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 agreement.
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 alone, according to Partech Ventures Africa.
“The digital economy can and should change the course of Africa’s history. This is an opportune moment to tap into the power of the continent’s tech startups for much-needed solutions to increase access to education, healthcare, and finance”, she said, adding that this would not only ensure a more resilient recovery, but make Africa a world leader in digital innovation and beyond.
Friedeburg said that digital startups in Africa were driving innovation in fast-growing sectors, including fintech, healthtech, media and entertainment, e-commerce, e-mobility, and e-logistics, thereby contributing to Africa’s growing Internet Gross Domestic Product (iGDP) — defined as the Internet’s contribution to the GDP.
Google Africa director Nitin Gajria said that Google and IFC created the report to highlight the role the digital startup sector is playing in driving Africa’s growth and in order to showcase and support the opportunities the continent presents.
He said that an analysis within the report, conducted by Accenture, found that the continent’s Internet economy in 2020 could account for approximately $115 billion of Africa’s $2.554 trillion GDP representing 4.5 per cent of total GDP, 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.
Gajria said that investments in infrastructure, consumption of digital services, public and private investment, new government policies and regulations will play important roles in supporting Africa’s digital growth.
The investments in digital skills would, however, need to increase in order to help drive technology usage and continue to grow the continent’s talent pool.