Africa’s Internet economy has the potential to reach 5.2% of the continent’s gross domestic product (GDP) by 2025, contributing nearly $180 billion to its economy, according to a report from Google and the International Finance Corporation (IFC).
The report titled e-Conomy Africa 2020, pointed out that the internet economy in Africa is bound to see exponential growth as a growing urban and mobile population brings tremendous potential to the economy.
Specifically, Google and IFC estimate that internet penetration is 40% today and a 10% increase in mobile internet penetration can increase GDP per capita by 2.5% in Africa, compared with 2% globally.
“Increasing Internet penetration to 75% has the potential to create 44 million new jobs. The projected potential contribution could reach $712 billion by 2050,” the report added.
Analysing the report, the Interim Managing Director, Executive Vice President and Chief Operating Officer of IFC, Stephanie von Friedeburg, said: “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 tech startups for much-needed solutions to increase access to education, healthcare, and finance, as well as ensure a more resilient recovery, making Africa a world leader in digital innovation and beyond.”
“Digital startups in Africa are driving innovation in fast-growing sectors, including Fintech, Healthtech, media and entertainment, e-commerce, e-mobility, and e-logistics, contributing to Africa’s growing internet gross domestic product (iGDP), defined as the internet’s contribution to the GDP,” he added.
Google Africa Director, Nitin Gajria, said: “Google and IFC have created this report to highlight the role the digital startup sector is playing and other factors to drive the continent’s growth in order to showcase and support the opportunities the continent presents.”
Some other key findings from the 2020 report include:
· Access to early-stage and pre-seed funding is still lacking across most of the continent. In a 2019 survey, 82% of African startups reported difficulties in accessing funding. Key issues include insufficient seed funding, limited follow-on funding, and a lack of angel investors.
· Venture capital investment in Africa reached an all-time high in 2019, increasing year-on-year for the past five years reaching a record of $2.02 billion in equity funding raised in the last year, while the first half of 2020 closed with $493.5M of total funding.
· Fintech startups remain the top destination for funding, receiving 54% of all startup investment in 2019 followed by e-Commerce.
There are as many as 700,000 professional developers across Africa with more than 50 per cent concentrated in five key African markets: Egypt, Kenya, Morocco, Nigeria, and South Africa.
to play in enabling this step-change in development.