Africa's internet economy to contribute US$180bn by 2025
Africa’s internet economy has the potential to reach 5.2% of the continent’s GDP by 2025, contributing nearly US$180-billion to its economy - according to a new report by Google and the World Bank’s International Finance Corporation (IFC)
The report e-Conomy Africa 2020, projects the potential contribution could reach US$712-billion by 2050.
It attributes growth to a combination of several factors including increased access to faster and better quality internet connectivity, a rapidly expanding urban population, a growing tech talent pool, a vibrant start-up ecosystem and Africa’s commitment to creating the world’s largest single market under the African Continental Free Trade Area (AfCFTA).
According to the report, Africa is home to 700, 000 developers and that venture capital funding to start-ups has increased year-on-year for the past five years with a record US$2.02-billion in equity funding raised in 2019.
It adds that digital start-ups in Africa are driving innovation in fast-growing sectors, including Fintech, healthcare, media and entertainment, e-commerce, e-mobility and e-logistics, contributing to Africa’s growing iGDP or internet’s contribution to GDP.
Investment 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, according to the research.
Stephanie von Friedeburg, interim managing director, executive vice president and chief operating officer of the IFC said,” The digital economy can and should change the course of Africa’s history. This is an opportune moment to tap in the power of continent’s tech start-ups for much-needed solution to increase access to education, healthcare and finance and ensure a more resilient recovery, making Africa a world leader in digital innovation and beyond.”
Google Africa director Nitin Gajria said, “Google and IFC have created this report to highlight the role the digital start-up 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 US$115-billion to Africa’s US$2.554 trillion GDP (4.5% of total GDP),up from US$99.7-billion (3.9% of total GDP) in 2019, with the potential to grow as the continent’s economies develop.