SA tipped as future African internet leader 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 internets contribution to economic growth on the continent will increase dramatically over the next decade. According to the report, released on Wednesday, the continent, following a decade of rapid urbanisation and strong economic growth, is going digital. While just 16 percent of the continents one-billion people are online, that picture is changing rapidly, says McKinsey. Africas 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 continents 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 internets 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. Under this leapfrog scenario, McKinsey predicts, Africas iGDP could account for as much as 10 percent of total GDP - or about US$300-billion - by 2025, with increased internet penetration and use driving private consumption 13 times higher than current levels. Internet growth drivers Demographic trends - including urbanisation, rising incomes, and a huge generation of young, tech-savvy Africans - will drive this growth, the report continues. More than half of urban African consumers already have internet-capable devices. Basic smartphones have already fallen below the tipping point of $100 per unit, and companies are introducing new affordable models specifically geared to the African market. Africas smartphone penetration, currently at 2 to 5 percent, could reach 50 percent in leading countries and 30 percent overall. This translates into 300-million new smartphones being sold in Africa in the decade ahead. PC, laptop, and tablet penetration could double, to 40 percent. Most African countries have strategies for information communications technology in place, including plans to move key processes such as benefit payments and tax filing online, and introduce digital health and education initiatives. If governments fully implement these plans, McKinsey argues, Africas public-sector spending on internet- related initiatives could rise sharply by 2025. Private investment, too, is likely to increase significantly as telecommunications operators continue to build out networks and as more companies begin digitising their operations. Morocco, South Africa poised to lead Among McKinseys 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 Kenyas 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. Already Morocco has the highest internet penetration in Africa (and recently announced a 10-year plan to create universal broadband access), while preliminary 2013 data indicate that South Africas internet adoption is rapidly accelerating, McKinsey states. To fully leverage these advantages, both countries may need to strengthen infrastructure, cultivate ICT skills in their workforce, and sharpen their national ICT strategies. SA - the Good News via SouthAfrica.info
Posted on: Thu, 03 Jul 2014 09:56:42 +0000
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