A new report has projected Africa’s consumption of the internet to increase by over 300 percent every month, as the pandemic has forced many activities online – a development which could add about US$180 billion to the continent’s economy in the next five years.
The report dubbed ‘e-Conomy Africa 2020’ published by the International Finance Corporation and Google, says even though the pandemic is expected to slow Africa’s economy and that of the world, it has driven internet usage and access high on the continent, hence, by 2025, the internet economy has the potential to reach 5.2 percent of the GDP on the continent.
The influx of mobile phones in Africa, according to the report, has catapulted this growth, as 60 percent of the population is accessing the internet via mobile; adding that by 2025, 167 million more people from Sub-Saharan Africa will have subscribed to mobile services reaching 623 million users, and smartphone connections in the region will more than double. And in the next decade, the number of internet users in Africa will grow by 11 percent, representing 16 percent of the total global amount.
Again, according to the report, internet GDP (iGDP) may contribute approximately US$115 billion to Africa’s 2.5 trillion GDP (4.5 percent) in 2020, up from US$99.7 billion in 2019, with a potential to grow as the economies gradually develop. By way of comparison, in developed economies like the US, the internet economy contributed to 9 percent of GDP in 2018.
Another positive development the report brought out is a surge in e-commerce behaviours which may even extend beyond the pandemic period.
“Consumers have initially focused on necessities such as food and medical- or health-related items, due to the uncertainty of the supply chain, low or unreliable discretionary spending, and consumer wariness. However, e-Commerce markets may experience an increasing volume of shoppers exploring other retail offerings as behaviors change post-pandemic.
Already 37 percent of South Africans have reported shopping online more than usual during this public health crisis. After the pandemic subsides, the anxiety surrounding large payment transactions that usually results in cash-on-delivery for products such as consumer electronics and clothing items may also subside as consumers become more accustomed to online shopping,” the report stated.
However, one thing that remains a barrier is affordability of mobile phones. According to the report, entry-level and second-hand devices have prices ranging from US$35 to US$40, which is the equivalent of up to 80 percent of monthly wages in some African countries.
“Affordability levels exceed the global 2 percent of monthly income target in more than 75 percent of countries in Sub-Saharan Africa, largely due to the high import cost of devices. Asian brands account for 70 percent of the African mobile device market, with the Chinese-owned Transsion leading in volume. As local phone manufacturing grows and structured payment plans become more prevalent, smartphones are expected to become more affordable and available,” says the report.
Also, access to electricity has been touted as instrumental to realising the full potential of the internet economy as the report reveals more than half of the people on the continent has no access to electricity.
“Access to electricity is essential for supporting the electronic devices and IT infrastructure that drive the expansion of the Internet economy. It enables users to power their devices, especially smartphones and tablets, and telecom operators to run their IT infrastructure, including main distribution frames, base stations, and Internet exchange points.
Data center operators also need access to reliable electricity to provide data storage and processing services. While such access is a given in most parts of the world, Africa, especially the Sub-Saharan region (with South Africa as a partial exception), is still home to more than half a billion people with no electricity,” said the report.