The McKinsey Global Institute released a report evidencing spurred economic growth in Africa based on the proliferation of internet on the continent, particularly with mobile devices. Significant infrastructure investment in telecommunications along with access to inexpensive internet-capable mobile phones and tablets have led to the rapid ascent of internet access to the continent’s 1 billion people.
As a result, iGDP – the internet’s contribution to overall GDP – in countries such as Senegal, Kenya and Morocco is the level of many advanced economies (see graph). Although the measure for the entire continent remains low at 1.1% (vs 3.7% average for developed economies), there is evidence it should grow to 5 to 6 percent by 2025. Growth is being driven by urbanization and young, tech savvy Africans with higher disposable incomes.
McKinsey names a few key sectors where technology productivity gains could be highest:
- Financial Services: reduced transaction costs and mobile payment platforms will bring more individuals to use formal banking services and greater capital to financial markets.
- Education: Greater learning content can become more accessible through inexpensive e-readers and tablets. The study sites $30 – $70 billion in productivity gains in this sector.
- Retail: Like most developed economies, e-commerce will continue to disrupt traditional retail. In Africa, the study predicts $75 billion in annual revenue by 2025.
- Health: Remote diagnosis, treatment and education will become powerful tools in a region where patients must travel long distances to reach medical staff who are already in short supply. The social and economic impact of a healthier workforce will be even greater.
- Agriculture: Greater access to weather patterns and farming education will make crops more productive and provide cheaper access to markets.
- Government: Transparency and revenue collection will see the greatest productivity gains to the tune of $10-$25 billion.
The International Trade Administration announced a new program earlier this year to take advantage of such emerging opportunities in Africa. Trade Africa will support expanded trade with Eastern Africa Communities (EAC) and Power Africa, a new initiative to double access to power in sub-Saharan Africa.
Contact us today to find out how to access these enormous opportunities.