The digital transformation driving change in Africa

18th August 2016

By: Kim Cloete

Creamer Media Correspondent


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Digital transformation is sweeping the world and making big inroads in Africa, where 600-million people are expected to be Internet users by 2025, when there will be four-billion connected devices on the continent.

This was outlined at the Growth, Innovation and Leadership Africa 2016 conference in Cape Town, which has a sharp focus on digital transformation. 

Frost & Sullivan senior partner Dorman Followwill, for instance, expects 100-billion connected devices globally by 2025, with six connected devices for every user. The global consulting firm, which provides market research and analysis, anticipates there will be six-billion Internet users within the next ten years.

Followwill was upbeat about the prospects for Africa and said the continent could emerge as “the new China”.

“The mobile revolution in Africa is the gateway to the future. Africa’s digital economy is expected to reach $315-billion by 2025, accounting for 7% of the continent’s gross domestic product.”

Followwill outlined five areas where he expects to see dynamic changes globally and in Africa.

A virtual currency boom will sweep Africa. 

“Bitcoin is the preferred mode for remittances in Africa and has the potential to revolutionise the remittance market within the next five years,” Followwill said.

Traditional wire transfer costs $24 and takes five days, but using Bitcoin costs $6, with the money available on the same day.

Digital payment systems are expected to help remove hurdles in inter-African trade, while electronic payment platforms can also solve some of the challenges facing traders, who have battled with the absence of regional payment systems in the past.

Big data, a subtrend of the connectivity megatrend, is reinventing industries such as the insurance industry. New products, real-time pricing and real-time calculation of premiums based on analytics is possible.

For example, Santam saved millions of rands through a big data analytics platform it set up following concerns about the high rate of short-term insurance fraud which was accounting for 15% of premium costs in South Africa.

Digital transformation is having a major impact on online retail, but also in the fields of logistics and infrastructure.

Uber for taxis, but also for cargo, is revolutionising the logistics space. The future of logistics has led to an abundance of drones and the emergence of Amazon Prime Air – a future system for the delivery of packages to customers by drone.

“In Africa, Rwanda is going to be the staging ground for this, as there are so many hills,” Followwill said.

Women are the key buyers around the globe and also the biggest online buyers. Further, in countries such as India and China the middle-class has increasingly more power.

The youth is expected to propel wealth. In Africa, more than half of the population will be below the age of 30 by 2025. Africa is expected to have the highest growth rates among all markets in key wealth brackets.

“It’s off a smaller base, but the growth will be amazing,” said Followwill.

Frost & Sullivan expects the number of billionaires in Africa to grow by 52% by 2025.

Owning transactions, rather than owning assets, is a feature of the future, says Followwill.

Twenty years ago, it was all about owning assets. Think companies like Coca-Cola, GE and Royal Dutch Shell. In 2016, this has completely changed, with Apple, Google and Microsoft at the forefront.

Frost & Sullivan believes integrated platforms are the next frontier, where you can build services, together with products, payment platforms, like PayPal, and content platforms such as YouTube.

Edited by Creamer Media Reporter



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