Africa’s internet usage holds much potential even though penetration is quite slow but steadily rising, this is according to the Mckinsey internet transformative November 2013 potential report. 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.
According to the report, Africa’s iGDP (which measures the Internet’s contribution to overall GDP) remains low, at 1.1 percent—just over half the levels seen in other emerging economies. But there is significant variation among individual countries. Senegal and Kenya, though not the continent’s largest economies, have Africa’s highest iGDPs, and governments in both countries have made concerted efforts to stimulate Internet demand (exhibit).
16% Internet penetration, 167 million Internet users
67 million smartphones, 50% of urban residents are online
51.6 million Facebook users, $18 billion Internet contribution to GDP
Internet penetration stands at 16% with 167 million internet users out of the continent’s one billion people but this is rapidly rising as mobile networks roll out services and cost of Internet-capable devices continues to fall. More than 720 million Africans have mobile phones, while about 50% of urban residents are online and 52 million Facebook users and a contribution of $18 billion contribution to GDP .
By 2025, Africa’s iGDP is expected to grow to at least 5 to 6 percent, matching that of leading economies such as Sweden, Taiwan, and the United Kingdom. However, if the Internet achieves the same kind of scale and impact as the spread of mobile phones in Africa, iGDP could account for as much as 10 percent, or $300 billion, of total GDP while producing a leap forward in economic and social development.
Under this scenario, increased Internet penetration and use could propel private consumption 13 times higher than current levels. Demographic trends—including urbanization, rising incomes, and a huge generation of young, tech-savvy Africans—will drive this growth.
The Internet holds tremendous value for commerce as companies utilizing Web technologies have been noted to grow twice as fast as those with minimal online presence, thus generating more revenue through exports and creating more jobs. Online prices are also on the average around 10 percent lower than offline prices as a result of the transparency provided by search tools, generating tens of billions of consumer surplus in the nations with the widest Internet use.
The Internet will generate economic growth and social transformation in six sectors namely: financial services, education, health, retail, agriculture, and government.