Internet promises to connect Africa to economic prosperity

It is now common knowledge that internet holds immense potential for Africa, with economic and financial experts in agreement that technology is the springboard the continent needs to leapfrog challenges that usually undermine growth in developing countries.   

Various reports and statistics point to a growing contribution of internet to the economic growth of various African countries.  And now a new survey titled E-conomy Africa 2020 released on November 11 is adding its voice to these sentiments, underscoring the point of view that if the continent robustly adopts new technologies, it will be able to overcome its economic challenges with relative ease.

The new report by Google and the International Finance Corporation (IFC), estimates that by 2025 the internet economy will contribute Sh19.5 trillion to the continent’s economy, with a projection of Sh77.5 trillion by 2050.

A blend of technologies will work jointly to bring about this future to reality. These innovations are in realms such as fields of fintech, e-commerce, telemedicine, edtech, entertainment, local transportation, food delivery and e-logistics.

The expansion of the digital economy is in tandem with deepening internet access, with the number of people having internet access rising to over 520 million since 2000. This represents 40 percent of the population.   Out of this, 60 percent access the internet on mobile phones.

 It is projected that 167 million additional people will subscribe to mobile services in the next four years, taking the total figure to 623 million.

“By 2025… smartphone connections in the region will more than double,” the report indicates.

The research sees the number of internet user in Africa growing by 11 percent in the next decade. This expansion means a lot for the continent, with the survey saying that increasing internet access to reach 75 percent of the population could create 44 million jobs.

Google Africa director Nitin Gajria notes that the report was generated to highlight the role that “the digital startup sector is playing and other factors driving the continent’s growth, in order to showcase and support the opportunities the continent presents.”

  The study shows 144 mobile money services are available across Sub-Saharan Africa, serving more than 469 million registered accounts with daily transactions rising to over Sh130 billion by the end of 2019, compared to 298 million registered accounts for traditional bank accounts in 2017.

While internet use in Africa lags other regions in a number of key metrics, the continent has a lot to celebrate about. In the past few years, the report says, the region has seen increased access to faster and better quality internet connectivity, a rapidly expanding urban population, a growing tech talent pool, a vibrant startup ecosystem, and more commitment to creating the world’s largest single market under the African Continental Free Trade Area, of 1.3 billion people.

The report finds that 19 of the top 20 fastest growing countries in the world are in Africa while urbanisation is on the rise, and “an increasingly young and educated population is driving higher consumption of online services.”

Currently, Africa, which is home  to 700,000 developers and venture capital funding for startups has increased year-on-year for the past five years, with a record Sh205 billion in equity funding raised in 2019, according to Partech Ventures Africa.

“The digital economy can and should change the course of Africa’s history. This is an opportune moment to tap into the power of the continent’s tech startups for much-needed solutions to increase access to education, healthcare, and finance, and ensure a more resilient recovery, making Africa a world leader in digital innovation and beyond,” said Stephanie von Friedeburg, Chief Operating Officer of IFC.

Google and IFC say monthly data consumption is forecasted to increase by over 300 per cent by 2024.

This, the report adds, will lead to a higher demand for faster and more reliable Internet. There has been significant progress in reducing the cost of data over the past few years.  

“Tariffs have dropped from 13.2 percent of average monthly income to 6.8 percent between 2016 and 2019. As governments continue to implement mandates and the supply of mobile devices continues to grow, Internet access will become more widespread and affordable,” it says

Based on the Inclusive Internet Index, Kenya, South Africa, Tunisia, Morocco, and Nigeria are currently best positioned for thriving internet economies.

While the majority of mobile connections in Africa are slower-speed 2G connections, 3G broadband connections are predicted to account for 54 percent of all connections by 2025, with 4G connections reaching 31 percent. Fixed broadband has also grown 15 percent annually since 2015 and is expected to triple by 2023.

The internet revolution has seen the rise of states perceived as war-torn such as Somalia and Sudan, which have ranked incredibly well in the 2020 global mobile data affordability index report released by British internet research firm Cable.

“Somalia has the cheapest data in Africa where 1GB of data costs Sh53 on average from Sh662 last year, it is seventh in the world,” the report reveals.

Somalia is followed by Sudan at position 13, Algeria 15th, Reunion 22nd, Tanzania 23rd, Ghana 34th, Western Sahara 36th, Morocco 37th, Kenya, Mayotte 44th, Egypt 45th while Djibouti closes the top 50 index at position 48.

Citizens in these countries pay Sh68, Sh70, Sh77, Sh101, Sh106, Sh106, Sh112, Sh116, Sh117 and Sh121 for every 1GB of mobile data on average, respectively.

Zambia, Tunisia, Nigeria, Rwanda, Uganda, Congo, Guinea, Burundi, Lesotho, Ethiopia, Burkina Faso and Mauritius all make it in the top 100, surpassing developed economies such as Germany, the United States, Switzerland, South Korea, Belgium, Portugal, New Zealand, Norway and the Netherlands.

The GSMA report of 2019 projects that average mobile data usage will grow from 1.3 gigabits per person per month to 7.3 GB by 2024.

Of the total GDP for Sub-Saharan Africa in 2018, 8.6 per cent came from mobile technologies and services, translating to 15.6 trillion gain. Nearly 3.5 million people were employed in the mobile sector, and corresponding taxes contributed another Sh1.7 trillion.

But even with such huge potential, Africa still lies at the bottom of the global supply chain, and retains the lowest per capita income, mostly because it lost out during the Third Industrial Revolution of the 1990s, as other continents went big on manufacturing and exports.

Stefan Dercon, professor of economic policy at Blavatnik School of Government at Oxford University says Africa should work hard to avoid a similar mistake in Industry 4.0.

“Now is a moment in history where every developing country has an equal chance to mould its digital future. Governments must show political commitment in delivering transformational plans. The right policy choices must be made,” he observes.

He adds that African nations must shake off the challenges they face and forge ahead in adoption of new technologies.

“Every country has challenges, for instance, corruption. You must see beyond these hurdles. Don’t use this as an excuse. Regulatory sandboxes must be created. The wait-and-see mentality will be costly in ten years’ time,” warns Prof Dercon.

University of Nairobi’s Business School don Bitange Ndemo says for Africa to cushion itself from global technological manipulation, the region must work with speed actualise its dream of a trade bloc.

“Time is running out to for the unification of all 55 nations,” Prof Ndemo cautions.

“We need to enhance efforts of strengthening AfCFTA which will be a 1.3 billion people digital single market for Africa to negotiate in the global digital economy.”

Africa, he says, can only have a strong voice in the world when it speaks as one.

 Founder of Harare-based technology and energy company Econet, Strive Masiyiwa acknowledges the power of digital technologies in growing businesses and African economies.

Mr Masiyiwa notes that to attain inclusive benefit from the new technologies, where all 54 nations walk in the same pace, African governments must design a workable plan.

“Digital tools have enabled entrepreneurs access markets and have also supported governments deliver services more efficiently to citizens. But without visionary planning and 21st century skills training for everyone, these same technologies over time could lead to job losses and escalate financial inclusion snags,” he cautions.

Mr Masiyiwa says the global Artficial Intelligince (AI) market which is estimated to be worth over Sh1.8 quadrillion and this money, will be split between the United States and China who will take up 70 percent of it.

“Of the remaining 30 percent, the African bloc should strive at get at least 10 percent,” Mr Masiyiwa urged.

“Let’s create our own version of Silicon Valley, our own platforms whilst including everyone.”

 When AfCFTA was enacted in May 2019, the African Union created the single biggest free trade zone on the planet, containing almost every African country. It aims to reduce tariffs on 90 per cent of all goods traded.

To achieve this, Mr Masiyiwa says all African countries need to open up their borders for one another to facilitate free movement of goods, services, capital, and people.

“The continent has 2 billion mobile money users which is a great step in adoption of fintech. But we have to pull together, and speak as one continental voice regarding tech regulation,” he says.

Melinda Gates, co-chair of the Bill and Melinda Gates Foundation as well as Pathways Commission, stresses the need for inclusivity in the digital realm, saying glaring gender gaps will hurt Africa’s development.

“Today, huge gender gaps in digital access are the norm in developing countries. If we invest in closing these gaps, women and girls can start to meet their untapped potential,” she said.