It is estimated that Africa’s Internet economy has the potential to reach 5.2% of the continent’s gross domestic product (GDP) by 2025, contributing about $180-billion to the continent’s economy, a report released by Google and the International Finance Corporation (IFC) on November 11 shows.
Driving this growth is a combination of increased access to faster and better quality Internet connectivity, a rapidly expanding urban population, a growing technology 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.
The report also projects that the potential contribution of the growth in the Internet economy could reach $712-billion by 2050.
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, notes venture capital firm Partech Ventures Africa.
IFC interim MD, executive VP and COO Stephanie von Friedeburg says 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, and ensure a more resilient recovery, making Africa a world leader in digital innovation and beyond.”
According to the authors of the report, 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.
Google Africa director Nitin Gajria says Google and the IFC have created this report to highlight the role the digital startup sector is playing and other factors driving the continent’s growth, to showcase and support the opportunities the continent presents.
An analysis within the report, conducted by Accenture, found that this year, Africa’s iGDP may contribute about $115-billion to Africa’s $2.55-trillion GDP (4.5% of total GDP). This is up from $99.7-billion (3.9% of total GDP) in 2019, with the potential to grow as the continent's economies develop.
Going forward, the reports suggests that 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 also notes that investment in digital skills will also need to increase to help drive technology usage and continue to grow the continent’s talent pool.