The internet holds the power to transform Africa, says the McKinsey Global Institute.
Expanding internet access and unleashing its capabilities can impact six areas: financial services, education, health, retail, agriculture, and government. A new report, Lions Go Digital: The Internet’s Transformative Potential in Africa, predicts that 500 million people in Africa will be online by 2025. It is a dramatic increase from the 16 million people connected to the internet today.
An analysis of the fourteen leading economies in Africa reveals varying progress of internet impact. Kenya and Senegal are considered leaders which the large economy of Nigeria is a country ‘punching below its weight.’
Optimism springs from the low contribution of the internet to the GDP (iGDP) of many African nations. In the US, the internet contributes to 3.8% of GDP. The average across Africa is only 1.1%, nearly half that of other emerging economies, says the report. The gap demonstrates the potential benefit that the internet can have on African economies.
“Today, following a decade of economic expansion, Africa is going digital,” say the report authors in the introduction.
Africa’s iGDP should grow to at least 5% by 2025, but could go as high as 10% if the spread of internet follows in the same path of mobile phones. The growth is expected to piggyback on the expansion of smartphones across the continent. Usage is low now, but falling prices of phones, improving technology and cheaper internet data plans will make smartphones a more popular choice.
Not everyone is convinced that the internet is the best place to invest resources. Bill Gates is among the skeptics of the impact that increased internet access can have on developing countries.
“When you’re dying of malaria, I suppose you’ll look up and see that balloon, and I’m not sure how it’ll help you,” said Gates to Businessweek in August. “When a kid gets diarrhea, no, there’s no website that relieves that.”
The balloons he referenced are part of Project Loon, an initiative from Google. The internet giant plans to deploy hundreds of giant balloons that will provide instant internet coverage in remote areas. Project Loon is still young, with only 50 people testing it out in New Zealand.
Authors of the report point to the impact that the internet has had on emerging economies as the reason why it is a worthwhile investment.
“The Internet is a catalyst for economic growth. Previous MGI research found that it has contributed more than 10 percent of total GDP growth over the past five years in China, India, and Brazil, and its impact is accelerating,” write the authors.
Gains like increased access to banking, improved education and a more efficient health workforce are all possible through increased internet access, says the report. Leadership from the governments and the private sector can realize the predicted growth. The authors say it is an exciting time and opportunity for growth.
“For now, the Internet in Africa remains a wide-open space where companies and entrepreneurs can capture large opportunities if they are willing to move rapidly and decisively,” they conclude.
