A new report published by Google and the International Finance Corporation (IFC), estimates that Africa's Internet economy has the potential to reach 5.2 percent of the continent's gross domestic product (GDP) by 2025, contributing nearly $180 billion to the overall economy.
The projected potential contribution could reach $712 billion by 2050.
The report, dubbed e-Conomy Africa 2020, was created by Accenture on behalf of the two institutions.
Driving this growth is a combination of increased access to faster and better quality Internet connectivity, a rapidly expanding urban population, a growing tech talent pool, a vibrant startup ecosystem, and Africa's commitment to creating the world's largest single market under the African Continental Free Trade Area (AfCFTA).
Currently, Africa is home to 700,000 developers. Venture capital funding for startups has increased year-on-year for the past five years, with a record $2.02 billion in equity funding raised in 2019, according to Partech Ventures Africa.
Internet in Rwanda, according to the report, is available to 76 percent and affordable for 74 percent. By 2025, the country's iGDP is forecasted to grow to $0.9 billion before hitting $3.8 billion by 2050. Currently it stands at $0.5 billion.
Digital startups in Africa are driving innovation in fast-growing sectors, including fintech, healthtech, media and entertainment, e-commerce, e-mobility, and e-logistics, contributing to Africa's growing Internet gross domestic product (iGDP) — defined as the Internet's contribution to the GDP.
"The digital economy can and should change the course of Africa's history," said Stephanie von Friedeburg, Interim Managing Director, Executive Vice President and Chief Operating Officer of IFC.
"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, and ensure a more resilient recovery, making Africa a world leader in digital innovation and beyond."
An analysis within the report found that in 2020, the continent's iGDP may contribute approximately $115 billion to Africa's $2.554 trillion GDP which equates 4.5 percent of total GDP. This is up from $99.7 billion (3.9% of total GDP) in 2019, with the potential to grow as the continent's economies develop.
"Google and IFC have created this report to highlight the role the digital startup sector is playing and other factors driving the continent's growth, in order to showcase and support the opportunities the continent presents," said Google Africa director Nitin Gajria.
Investments in infrastructure, consumption of digital services, public and private investment, and new government policies and regulations will play an important role in supporting Africa's digital growth.
The report notes that investment in digital skills will also need to increase in order to help drive technology usage and continue to grow the continent's talent pool.Follow Mugisha_Cosma