ICTworks

Throughout the global pandemic, Africa’s Internet economy is proving resilient, as digital startups across the continent devise innovative COVID-19 digital response solutions to problems in a fast-changing world. These versatile Internet-based companies are leveraging Africa’s unique strengths to expand opportunities for significant economic growth that will help create jobs, reduce poverty, and contribute to overcoming the continent’s development challenges in the future.

The e-Conomy Africa 2020 report is a unique collaboration between Google and the International Finance Corporation to provide a timely analysis of Africa’s current Internet landscape, showcase African entrepreneurs and developers, and highlight growth opportunities within the continent. This report is particularly poignant due to three key trends accelerating the growth of the African Internet economy:

• Increased access to more affordable and higher-speed Internet across the continent
• The manner in which African startups are transforming the African economic landscape and creating new market opportunities
• Africa’s commitment to developing the world’s largest single market under the African Continental Free Trade Area

Google and IFC have created the e-Conomy Africa 2020 report to provide a road map for investment opportunities in a vital sector of the African economy that is on track to expand in the coming decade, transforming lives in the process.

5 African Internet Economy Opportunities

The African continent has nineteen of the top 20 fastest-growing countries. Urbanization is on the rise, and an increasingly young and educated population is driving higher consumption of online services. Add to this the single largest free trade zone in the world – the African Continental Free Trade Area (AfCFTA), enacted in May 2019.

Despite a negative macroeconomic outlook as a result of COVID-19, the African Internet economy is expected to be resilient. Here are five African Internet economy opportunities that build on these trends:

1. African Internet economy: large overlooked investment area.

Mobile Internet access is transforming life across the continent with the support of growing local connectivity and mobility and a dynamic, young urban population. With a potential to add up to $180 billion to Africa’s gross domestic product (GDP) by 2025, depending on the usage intensity of digital technologies by businesses, the Internet economy is improving productivity and efficiencies across large swaths of the economy, including agriculture, education, financial services, healthcare, and supply chains.

2. Burgeoning investor interest in African Internet economy

Buttressed by increasingly large liquidity events in African technology, even in the wake of the pandemic, venture capital funding in Africa reached an all-time high in 2019. There are signs that African venture capital funding is continuing its forward momentum, despite near-term disruption caused by COVID-19. The total amount of invested venture capital is still a fraction of total global venture capital funding, especially relative to the size of Africa’s population, but this gap presents potential first-mover advantages for investors.

3. African digital startups provide innovative COVID-19 solutions

For example, public sector partnerships with private healthcare startups are increasing the availability of testing and have expanded the capacity for medical recordkeeping. The continued operation of the informal sector – a major portion of Africa’s economic activity – is supported by e-Logistics and e-Commerce supply chain startups. New partnerships and business models like these will likely continue to influence startups across all industry sectors, even beyond the COVID-19 pandemic.

4. Africa has youngest, fastest-growing, urbanized workforce.

These demographics, coupled with improved longevity and education levels, have led to a rise in the consumption of online services. Additionally, heavily concentrated populations in Africa’s cities are supporting developer communities that attract new investors and talent pools. Rural populations also benefit from digital startups, and the Internet economy is critical to reaching and supporting the continent’s 1.3 billion people.

5. Young digital entrepreneur drive African Internet opportunity

Startups are solving some of Africa’s most challenging issues, such as access to healthcare for remote populations, employment opportunities for women, and the ability to securely send and receive money. Advanced technologies—tailored to data-driven, scalable, and pan-African approaches—are providing new ways for Africans to conduct business and earn income. A robust collaboration between the private and public sectors is imperative to ensuring that African entrepreneurs succeed, not only in their home countries and regions, but in the global marketplace. Startups, and the entrepreneurs who create them, are the future of the continent.