GROWING use of the internet in Africa could add $300bn a year to the continent’s gross domestic product (GDP) by 2025, according to a report released on Wednesday by global consulting firm McKinsey.
Further, the report tips South Africa as a future digital leader.
Internet services have experienced exponential growth in Africa, thanks to the significant investments made in building backbone infrastructure and the roll-out of 3G networks. This has allowed millions of Africans to connect to the internet for the first time.
McKinsey said the continent was now in a better position in terms of international bandwidth, as capacity had been added faster than peak demand had grown.
According to the report, only 16% of the continent’s 1-billion people are online, but the take-up is rising rapidly as mobile networks are built and as the cost of internet-capable devices continues to fall.
More than 720-million Africans have cellphones, about 167-million already use the internet and 52-million are on Facebook.
"The internet is a catalyst for economic growth," said McKinsey director and co-author of the report Saf Yeboah-Amankwah. "In China, India and Brazil, it has contributed more than 10% of total GDP growth over the past five years.
"Its impact in Africa to date has been much smaller, but is likely to accelerate in the coming decade and could have a transformative effect on the continent’s development."
Governments have placed internet-driven economic growth firmly on the agenda, with several countries pursuing ambitious plans to expand broadband access.
The South African government aims to provide access to each citizen of the country by 2020.
According to the report, South Africa and Morocco could emerge as the continent’s future digital leaders.
Morocco has the highest internet penetration in Africa and recently announced a 10-year plan to achieve universal broadband access, while South Africa’s internet adoption is rapidly accelerating.
Buoyed by thriving business process outsourcing (BPO) sectors, both countries already have positive internet-related trade balances. But Morocco and South Africa lag behind Kenya and Senegal in terms of iGDP — share of the internet’s contribution to GDP — due to lower contributions from private consumption.
According to McKinsey, BPO already generates more than $1.5bn in revenue, and accounts for 54,000 direct jobs in South Africa, while Morocco’s is at similar scale. Ghana, Kenya, Nigeria, and Senegal are among the countries with plans and potential to build their own BPO sectors.