Internet penetration in Africa will reach 21.8% by year-end says ITU

While of little immediate economic benefit currently, if Africa is able to drive internet growth to match or exceed levels as experienced in other global regions, the impact on the continent could be immense.

This is according to a report by Internet Society titled Promoting the African Internet Economy which looks at how greater usage of the internet and digitisation of the traditional economy amplifies economic growth.

According to the McKinsey Global Institute, the internet in Africa contributes just 1.1% to its GDP. However, the organisation states that with the right inroads made, productivity gain across six key sectors are projected to be between US$148 billion and US$318 billion by 2025.

“There is significant room for the internet sector to grow in Africa. The internet’s contribution to GDP in Africa is low relative to other developed and emerging economies,” notes Michael Kende, Internet Society’s chief economist and author of the report.

The Internet Society says because of this, the continent is unlikely to experience immediate results in terms of economic contribution. “Developing the internet sector in Africa, while critical for development, will have a beneficial, but ultimately limited impact on the size of the economy.”

The US non-profit organisation says as it stands today, there are already signs of growth of the internet economy in some African nations, but disparity remains.

Survival in hyper-connected world

Steven Ambrose, CEO of Strategy Worx says, “The internet economy has simply become the broader economy. No economy can run effectively today without technology and the underpinning of the internet. I believe that you cannot separate the direct influence of the internet any longer and without connectivity, no modern economy can thrive in today’s hyper-connected world.”

George Kalebaila, Research Director for telecommunications, media and the Internet of Things in Africa at IDC adds, “First of all, a number of studies have established a direct link between high broadband/internet penetrations to GDP growth. The impact differs from developed countries to developing countries, with the impact being higher in developing countries due to lack of other physical infrastructure such as roads, etc.

“In Africa, the ITU estimates that internet penetration will reach 21.8% by end of 2017. In 2010, this was just 6.7%. This phenomenal growth has been largely due to the rapidly increasingly mobile penetration as fixed infrastructure in most African countries is either non-existent or is in state of disrepair. Dropping smartphone prices, literate youth population and other factors are all driving this trend.”

Internet economy benefits

The Internet society says in addition to helping countries make significant progress towards achieving the United Nations’ Sustainable Development Goals, there are several other benefits to developing an internet economy.

“Businesses, across all sectors, can be more productive and efficient by harnessing new technology. At the same time, they gain access to a global marketplace of billions of people and millions of companies and have the opportunity to attract international investment and join international supply chains.

“Citizens in both rural and urban areas benefit from enhanced educational and training opportunities, can raise money for their own innovations, and communicate more efficiently. They also have access to new job opportunities, both in their own country from local start-ups, and in the international job market working remotely for a foreign employer.”

Alan Knott-Graig, Executive Chairman of wireless broadband provider HeroTel and founder of Project Isizwe, says, “The oft-quoted World Bank reports that for every 10% broadband penetration you get 1,28% GDP growth. Millions of Africans are currently unable to start a business or find a job simply because they are not connected to one another and to the greater local market. The internet, by definition, cuts out the middle-man, thereby bringing down costs.”