Lions Go Digital: The Transformative Potential Of The Internet in Africa

Internet Transformation In Africa

Following a decade of rapid urbanization and strong economic growth, Africa is going digital. While just 16 percent of the continent’s one billion people use the internet, that picture is changing rapidly.

Evidence of what is to come can already be seen in Africa’s major cities, where consumers have greater disposable income, more than half have Internet-capable devices, and 3G networks are up and running. Significant infrastructure investment—for example, increased access to mobile broadband, fibre-optic cable connections to households, and power-supply expansion—combined with the rapid spread of low-cost smartphones and tablets, has enabled millions of Africans to connect for the first time. There is a growing wave of innovation as entrepreneurs and large corporations alike launch new web-based ventures.

Africa’s Internet opportunity

Today, Africa’s iGDP1 (which measures the Internet’s contribution to overall GDP) remains low, at 1.1 percent—just over half the levels seen in other emerging economies. But there is significant variation among individual countries. Senegal and Kenya, though not the continent’s largest economies, have Africa’s highest iGDPs, and governments in both countries have made concerted efforts to stimulate Internet demand (exhibit).

Exhibit

The Internet’s contribution to Africa’s overall GDP is low. Senegal and Kenya, though not the continent’s largest economies, are in the lead.

By 2025, Africa’s iGDP should grow to at least 5 to 6 percent, matching that of leading economies such as Sweden, Taiwan, and the United Kingdom. However, if the Internet achieves the same kind of scale and impact as the spread of mobile phones in Africa, iGDP could account for as much as 10 percent, or $300 billion, of total GDP while producing a leap forward in economic and social development.

Under this scenario, increased Internet penetration and use could propel private consumption 13 times higher than current levels. Demographic trends—including urbanization, rising incomes, and a huge generation of young, tech-savvy Africans—will drive this growth.

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