Africa’s Internet Economy Poised for Significant Growth, Google and IFC Report Reveals

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In a report jointly released by Google and the International Finance Corporation (IFC), Africa’s internet economy is projected to make a substantial contribution to the continent’s gross domestic product (GDP), potentially reaching 5.2% by 2025. This growth could inject nearly $180 billion into Africa’s economy, indicating a remarkable transformation driven by digital innovation.

The report, titled “e-Conomy Africa 2020,” emphasizes the extraordinary potential of Africa’s internet economy, particularly as the urban and mobile population continues to expand. The findings underline that internet penetration in Africa currently stands at 40%. A modest 10% increase in mobile internet penetration holds the potential to enhance GDP per capita by 2.5%, surpassing the global average of 2%.

The report outlines that elevating internet penetration to 75% could pave the way for the creation of 44 million new jobs and generate a projected contribution of $712 billion by the year 2050.

Stephanie von Friedeburg, Interim Managing Director, Executive Vice President, and Chief Operating Officer of IFC, expressed her insights on the report, stating: “The digital economy can and should change the course of Africa’s history. This is an opportune moment to tap into the power of the continent’s tech startups for much-needed solutions to increase access to education, healthcare, and finance, as well as ensure a more resilient recovery, making Africa a world leader in digital innovation and beyond.”

The report underscores the role of digital startups across Africa in propelling innovation within rapidly growing sectors, including Fintech, Healthtech, media and entertainment, e-commerce, e-mobility, and e-logistics. This transformative impact contributes to the continent’s growing internet gross domestic product (iGDP), signifying the internet’s influence on the overall GDP.

Nitin Gajria, Google Africa Director, echoed this sentiment: “Google and IFC have created this report to highlight the role the digital startup sector is playing and other factors to drive the continent’s growth in order to showcase and support the opportunities the continent presents.”

Key takeaways from the 2020 report include:

  • The absence of early-stage and pre-seed funding remains a challenge in most of Africa. An alarming 82% of African startups reported difficulties in securing funding in a 2019 survey. Primary concerns involve inadequate seed funding, limited follow-on funding, and a shortage of angel investors.
  • Notably, venture capital investment in Africa surged to an all-time high in 2019, marking a steady year-on-year increase over five years, culminating in a record of $2.02 billion in equity funding. The first half of 2020 concluded with $493.5 million in total funding.
  • Fintech startups continue to attract the lion’s share of funding, receiving 54% of all startup investments in 2019, followed closely by e-commerce.

The report’s findings paint an optimistic picture for Africa’s digital future, projecting immense opportunities for growth and transformation across various sectors.

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