Following a decade of rapid urbanization and strong economic growth, Africa is going digital. While just 16 percent of the continent’s one billion people are online, that picture is changing rapidly.
Evidence of what is to come can already be seen in Africa’s major cities, where consumers have greater disposable income, more than half have Internet-capable devices, and 3G networks are up and running. Significant infrastructure investment — for example, increased access to mobile broadband, fibre-optic cable connections to households, and power-supply expansion—combined with the rapid spread of low-cost smartphones and tablets, has enabled millions of Africans to connect for the first time. There is a growing wave of innovation as entrepreneurs and large corporations alike launch new web-based ventures.
The report examines the progress and potential of the Internet in 14 economies that together make up 90 percent of Africa’s GDP. It maps the progress of each country on its digital journey, and highlights steps that the public and private sectors can take to capture the Internet’s full potential.
“The Internet is a catalyst for economic growth: in China, India, and Brazil, it has contributed more than 10 percent 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 the continent’s development,” says Johannesburg based McKinsey director and co-author of the report, Saf Yeboah-Amankwah.
As a result, the Internet is likely to take hold on a much larger scale in the coming decade — and could generate magnified economic growth. Mobile voice has already had an outsized effect in Africa as it connected people who previously had little or no access to telecommunications. If the Internet produces a similar multiplier effect, it could contribute some $300 billion to Africa’s GDP by 2025.
The impact could include e-commerce sales of $75 billion a year — sparking an e-tailing revolution that gives African consumers much wider choice at lower prices. It could also unlock significant productivity gains across business, government and social services.
The Internet will generate economic growth and social transformation in six sectors in particular: financial services, education, health, retail, agriculture, and government. In financial services, for example, M-Pesa’s mobile money solutions have brought millions of Kenyans onto the financial grid for the first time. Remote diagnostics are expanding medical services to rural areas that have few health-care professionals. Students are beginning to learn with new digital education tools, and e-government initiatives are connecting citizens with services.
To sustain this momentum, however, governments and the private sector will need to ensure that the foundations are in place to support demand and continue this wave of innovation. The report notes that increasing access and infrastructure, developing a workforce with ICT skills, and improving digital literacy in the broader population will be critical for the future growth of the Internet.