A new report released by Google and the International Finance Corporation (IFC) forecasts Africa’s Internet economy will reach 5.2% of the continent’s gross domestic product (GDP) by 2025, which means it will contribute nearly $180-billion to its economy. This year, the figure is expected to reach $115-billion.
The report, entitled e-Conomy Africa 2020, takes a few iberties with forecasting, however, suggesting the contribution could reach $712-billion by 2050. How do they justify such rabbut-out-of-the-hat figures?
Google said in its announcment of the findings: “Driving this growth is 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.”
Currently, says Partech Ventures Africa, Africa is home to 700,000 developers, and venture capital funding for startups has increased year-on-year for the past five years to reach a record $2-billion in equity funding in 2019.
“The digital economy can and should change the course of Africa’s history,” says Stephanie von Friedeburg, executive vice president and chief operating officer of IFC. “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.”
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 and IFC have created this report to highlight the role the digital startup sector is playing and other factors driving the continent’s growth, in order to showcase and support the opportunities the continent presents,” says director Nitin Gajria, director of Google Africa.
An analysis for the report by Accenture found that, in 2020, the continent’s iGDP may contribute approximately $115-billion to Africa’s $2.554-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.
Investments in infrastructure, consumption of digital services, public and private investment, and new government policies and regulations are expected to play an important role in supporting Africa’s digital growth.
However, the report cautions that investment in digital skills will need to increase in order to help drive technology usage and continue to grow the continent’s talent pool.
The report is available for download here.