South Africa, Africa's internet leader

By Drum Digital
22 November 2013

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South Africa and Morocco could become leaders in driving the growth of the internet in Africa, according to a new report by global consulting firm McKinsey which predicts that the internet's contribution to economic growth on the continent will increase dramatically over the next decade.

According to the report, the continent, following a decade of rapid urbanisation and strong economic growth, is going digital. "While just 16 percent of the continent's one-billion people are online, that picture is changing rapidly," says McKinsey.

Africa's "iGDP" - the percentage of gross domestic product (GDP) that is contributed by internet-related activity - currently stands at 1.1 percent, just over half the levels seen in other emerging markets and well below the average of 3.7 percent in developed economies.

This is set to change over the next decade, the report argues, envisaging a "baseline scenario" in which the continent's iGDP grows to at least 5 to 6 percent of GDP, matching that of leading economies such as Taiwan, the United Kingdom, and Sweden.

However, if internet take-up mirrors that of mobile telephony in Africa, growth could be much more dramatic.

"To put the internet's potential for Africa in perspective, it is helpful to consider the impact of the mobile phone, which has revolutionised the way individuals interact and the way SMEs, farmers, and informal traders operate," the reports states. "As a result, mobile revenue is equivalent to 3.7 percent of GDP in Africa, more than triple its share in developed economies, where it was an incremental innovation."

Among McKinsey's sample of 14 African countries, Senegal and Kenya currently lead the way with iGDP figures of 3.3 percent and 2.9 percent respectively, followed by Morocco (2.3), Mozambique (1.6) and South Africa (1.4).

Senegal and Kenya's success is attributed in large part to government policy and its successful implementation. "Both governments have made it a priority to stimulate internet demand and have therefore driven private consumption, which accounts for more than 85 percent of iGDP in each country."

Morocco and South Africa, by comparison, have lower contributions from private consumption, but are the leaders in trade surplus, thanks to strong business process outsourcing industries, and have a higher contribution from public expenditure and private investment.

However, the report finds, Morocco and South Africa could become future leaders on the continent, as they have the highest "i5F scores" - that is, the highest scores on five pillars that indicate internet growth potential or readiness: national ICT strategy, infrastructure, a healthy business environment, financial capital, and human capital with the requisite technology skills.

Courtesy of SouthAfrica.info

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