Africa’s GDP to hit $300bn on internet expansion, says Mckinsey

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.

Over the last three years, estimates have shown that about $3.8 billion has been invested in submarine cables across Africa. The report said 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.

This figure, analysts said, is a vivid indication that the wealth creation and revenue generation potentials of the internet remains immensely untapped across the African continent.

This figure however varies widely across individual countries, from 0.6 percent in Ethiopia to 3.3 percent in Senegal. According to the report entitled, ‘Lions go digital: The Internet’s transformative potential in Africa’, the Internet is likely to take hold on a much larger scale in the coming decade, with previous research showing that its impact is magnified in emerging countries.

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 has 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,

source: www.bussinessdayonline.com