Africa's GDP to reach $ 300 billion on internet expansion

Considering the massive financial investment ploughed into the deployment of broadband infrastructure across the continent, the Internet, though still in its infancy, could contribute some $300 billion to Africa’s Gross Domestic Product (GDP) by 2025, according to a recent report by Mckinsey & Company, reports Ben Uzor Jr.

Over the last three years, estimates have shown that about $3.8 billion has been invested in submarine cables across Africa. The report said the Internet’s contribution to Africa’s GDP remains low, at a meagre 1.1 percent – just over half the levels seen in other emerging markets and well below the average of 3.7 percent in developed economies.

Mobile telephony has already had an outsized effect in Africa, connecting people who hitherto had little or no access to telecommunications, due to the scarcity of fixed-line infrastructure. If the Internet matches or exceeds that level of impact, according to analysts at Mckinsey, the result could be a leap forward in Africa’s economic growth and development.

Following a decade of rapid urbanisation and strong economic growth, Africa is gradually transiting into a digital economy, according to Mckinsey. While just 16 percent of the continent’s 1 billion people are online, that picture is changing quite rapidly. This is evident in the rise of greater disposable income of consumers in major African cities.

More than half of them have Internet-capable devices, and 3G networks are up and running. Significant investments in network expansion initiatives have increased access to mobile broadband, fibre connection to households and businesses – combined with the rapid spread of low-cost smartphones and tablets, has enabled millions of Africans to connect to the cyberspace for the first time, the report said.

There is a also growing wave of innovation as entrepreneurs and large corporations alike launch new web-based ventures. Six critical sectors of the African economy will probably experience the greatest impact of the internet, with technology-related productivity gains expected to grow from $148 billion to $318 billion by 2025, according to the report by Mckinsey. Financial services, education, health, retail, agriculture, and government have been identified as the sectors most likely to benefit from the improvements in internet infrastructure, the report said. In the area of financial services, the Internet is likely to be a huge accelerator of financial inclusion as it reduces transaction costs and brings financial services nearer to Africans.

source :businessdauonline.com