It is undeniable that digital infrastructure has developed significantly across the African continent in the past ten years. Digitising has moved from a secondary tool to a survival game-changer and a key part of achieving business goals. The more recent leaps in fintech, e-commerce, mobile payments and digital media consumption are evidence of a rapidly growing digital economy and the impact is seen to transform everything from elections to agriculture, creating bigger market opportunities and attracting investments to the region.
The growth is commendable but there is still a lot of headroom to cover and the continent must ready itself to maximise the potential dividends of these growth areas. Here are some important digital trends that will shape the advancement of Africa’s digital transformation:
Connectivity and Internet adoption remains the major driver of the continent’s digital acceleration
The gap between those who have access to technology and the means to use it and those who do not will translate into whether or not a person can earn a living and access private and public sector services and benefits, which will increasingly be delivered in a digital-only form. If a large majority of Africans cannot access these services, many digital development gains could be stunted. African governments and large telecommunications corporations are focusing on upgrading internet infrastructure: more than 30 African governments (55% of the continent) have procured 3G networks, while more than 20 countries (36% of the continent) have built fibre-optic networks and e-government platforms. We are also seeing large telco scale 4G network infrastructure and roll out 5G networks.
Today, at least a quarter of Africa’s population has internet access, a nearly fifty-fold increase in internet usage since the turn of the millennium. By 2030, the continent could achieve rough parity with the rest of the world when three-quarters of Africans are projected to become internet users. The economic potential is enormous: according to a 2020 report by the International Finance Corporation (IFC), the Internet is projected to contribute about $180 billion to Africa’s economy by the year 2025. This means that Africa’s internet economy will remain one of the largest investment opportunities on the continent for the foreseeable future.
Urbanisation will contribute to Africa’s rapid digital growth
68 cities in Africa, each home to over one million inhabitants in 2020, are projected to increase to 85 by 2025. By then, Africa’s urban population is predicted to grow by 190 million people, meaning that just under half (45%) of all Africans will be living in a city.
In some countries, such as Nigeria, Ghana, and Angola, the proportion of urban residents will increase to over 80% of their total population by 2050, when 800 million more Africans will have moved to urban areas.
In Africa’s large metropolitan areas, the amount of money spent on consumer goods and services is typically 79% higher than the national average. Given better connectivity in urban areas, those that choose to relocate to cities have more access to innovative technologies. This can broaden employment opportunities and create larger markets for commerce, driving financial and social inclusion for more people.
Young people are at the heart of Africa’s digital and economic growth
In any economy, the youth population is vital as they represent energy, creativity, and innovation. Africa is especially fortunate as the continent has the world’s largest youth population; around half of its population is under the age of twenty. This is evidently reflected in the number of youth-led innovations across the continent and how critical they are being more than ever before.
Regional and international organisations also recognize this potential. The Youth Alliance for Leadership and Development in Africa and the World Bank’s Youth Transforming Africa Initiative have held regular online roundtables on how Africa’s youth can respond to the COVID-19 crisis. At a national level, in Rwanda, Youth Voices Rwanda leverages social media networks to coordinate these responses.
Africa’s young demographic is also fuelling consumption. Young African consumers are becoming more affluent and globalised as they also grow to become household decision-makers. The proportion of the population that is of working age will continue to rise; by 2050, Africa will have the only decreasing dependency ratio globally. This boosts the continent’s competitiveness in both skilled and unskilled labour and will lead to increased spending power for consumers. By 2030, Africa is expected to be home to over 1.7 billion consumers with a total consumer expenditure of $2.5 trillion.
Tech startups are building a new Africa and future-proofing it along the way.
Leading the innovation drive across multiple markets in Africa are verticals like Fintech, Blockchain, e-Commerce, Healthtech, Media and Entertainment, Local Transportation and e-Logistics.
Fintech startups continue to be the most funded startups in Africa with the sector receiving $836 million across 65 deals in 2019 and $379 million across 42 deals in 2018, resulting in a 120% growth in funding and a 55% growth in deal volume YoY. The fintech sector is growing in Africa, in part, to serve the population that is currently unbanked and financially excluded. The rise of these solutions and access to mobile technology are driving demand and growth in this sector. Startups such as Flutterwave are providing platforms and APIs for the next generation of African startups
Even before COVID-19 led to an increase in e-commerce on the continent, Africa had been witnessing growth in the sector. The industry has shown incredible growth in the past decade, resulting from an improved payment-processing landscape, a rise in mobile technology, and mobile money tech adoption. Generally, the rise of companies like Nigeria’s Jumia & Helium Health, Uganda’s SafeBoda, Kenya’s Twiga Foods, and South Africa’s Takealot reveal a trend of the sectors expected to contribute a majority of the $712 billion that Africa’s internet GDP is estimated to add to the economy of the continent by 2050.
From where I stand, there is much to be proud of as an African working in the digital technology space and living in Africa. There is however a lot of work still to be done to keep moving the needle on Africa’s digital transformation journey. It is a collective effort that requires organisations, government bodies and individuals to reflect inwards and make the needed change and adjustments to being a part of this digital journey.
Private and public sectors must invest and adopt digital transformation as a way of working, not just a trendy buzzword. A partnership between these sectors to scale adoption and co-create digital and technological enabling policies is integral to driving sustained digital growth on the continent.
Written By Adim Isiakpona, Head of Sales, Google West Africa
Adim Isiakpona is a seasoned sales and marketing leader. He Heads sales at Google in West Africa and has been at the company since 2018. Today, his efforts are largely focused on accelerating digital transformation for customers in Africa which has led to incremental growth in Google’s Ad revenue over the course of four years.
Adim’s marketing experience spans from his role as Intel’s Head of Marketing, Communication and Programs for Africa, Middle East & Turkey to leading Marketing and Communication for Hewlett Packard West Africa.
© 2022 Ventures Africa. All rights reserved