Internet economy critical to Africa’s economic take-off

As we strive to understand the Fourth Industrial Revolution and its impact on our work and our lives, the conversation on the digital economy becomes crucial to understanding the opportunities that technology brings forth. The term ‘digital economy’ continues to evolve with a range of definitions, each attempting to capture the technologies’ potential and impact in the economy.

While we won’t dwell too much on the definitions, there is one by Deloitte that I found quite thorough and simple to understand. They define the digital economy as “the economic activity that results from the billions of online connections between people, businesses, devices, data and processes every day”.

Basically, it is any economic activity that arises as a result of human and technology connection going online. This will range from a business that uses technology to deliver goods and services to customers, to customers making payments using technology-enabled platforms, online shopping, accessing online educational content, content streaming platforms and even From using technology to working from home.

Given our highly digital lives, it’s safe to say that the digital economy is becoming more ubiquitous than we ever imagined, and soon, it may be the only way we know how to do business.

In Africa, the internet economy is expected to grow significantly and impact the gross domestic product (GDP) of the continent. Africa’s internet economy has the potential to reach over $180 billion by 2025, contributing 5.2 percent of the continent’s GDP, according to a 2020 report by the International Finance Corporation (IFC) and Google. It is also predicted that the Internet economy will exceed $712 billion by 2050 and contribute 8.5 percent to the continent’s GDP.

Furthermore, digitization is projected to be one of the biggest drivers for the continent to make a leap in financial stability. In a 2018 report by Professor Njuguna Ndungu, digitization is transforming African economies across four key themes: retail payment systems, financial inclusion, sustainable business models and revenue governance. With the world’s youngest population, rising education levels and a vibrant start-up sector, Africa is a prime candidate to reap the maximum benefits from the promising digital economy.

We have seen not only continental strategies such as the Digital Transformation Strategy (DTS) by the African Union, but also national level strategies that outline specific plans to take advantage of the digital economy.

Specifically, in Kenya, we have the Digital Economy Blueprint which sets out a conceptual framework for delivering an inclusive digital economy across five themes: digital government, digital business, infrastructure, innovation-driven entrepreneurship and digital skills and Value.

The same IFC and Google report said Kenya’s internet GDP potential could reach $12 billion by 2025, contributing 9.24 percent to the country’s GDP, ranking the country alongside Nigeria, South Africa and Egypt. Is.

Dr Chege is a media and technology researcher.