I recently came across this article from Mckinsey. It resonated with me and is in line with why we are so fanatically focused on making Alpha Anywhere the most complete and productive environment for building and deploying modern mobile and web apps that are secure, scalable, powerful and can help transform businesses and organizations.
I hope you find it interesting and inspiring.
Lions go digital: The Internet’s transformative potential in Africa
November 2013 | byJames Manyika, Armando Cabral, Lohini Moodley, Suraj Moraje, Safroadu Yeboah-Amankwah, Michael Chui, and Jerry Anthonyrajah
Following a decade of rapid urbanization and strong economic growth, Africa is going digital. While just 16 percent of the continent’s one billion people are online, that picture is changing rapidly.
Evidence of what is to come can already be seen in Africa’s major cities, where consumers have greater disposable income, more than half have Internet-capable devices, and 3G networks are up and running. Significant infrastructure investment—for example, increased access to mobile broadband, fibre-optic cable connections to households, and power-supply expansion—combined with the rapid spread of low-cost smartphones and tablets, has enabled millions of Africans to connect for the first time. There is a growing wave of innovation as entrepreneurs and large corporations alike launch new web-based ventures.
Africa’s Internet opportunity
Today, Africa’s iGDP1 (which measures the Internet’s contribution to overall GDP) remains low, at 1.1 percent—just over half the levels seen in other emerging economies. But there is significant variation among individual countries. Senegal and Kenya, though not the continent’s largest economies, have Africa’s highest iGDPs, and governments in both countries have made concerted efforts to stimulate Internet demand (exhibit).
The Internet’s contribution to Africa’s overall GDP is low. Senegal and Kenya, though not the continent’s largest economies, are in the lead.
By 2025, Africa’s iGDP should grow to at least 5 to 6 percent, matching that of leading economies such as Sweden, Taiwan, and the United Kingdom. However, if the Internet achieves the same kind of scale and impact as the spread of mobile phones in Africa, iGDP could account for as much as 10 percent, or $300 billion, of total GDP while producing a leap forward in economic and social development.
Under this scenario, increased Internet penetration and use could propel private consumption 13 times higher than current levels. Demographic trends—including urbanization, rising incomes, and a huge generation of young, tech-savvy Africans—will drive this growth.
More than half of urban African consumers already have Internet-capable devices. Basic smartphones have already fallen below the “tipping point” of $100 per unit, and companies are introducing new affordable models specifically geared to the African market. Africa’s smartphone penetration, currently at 2 to 5 percent, could reach 50 percent in leading countries and 30 percent overall. This translates into 300 million new smartphones being sold in Africa in the decade ahead. PC, laptop, and tablet penetration could double, to 40 percent.
Most countries have strategies for information communications technology in place. If governments fully implement these plans, move key processes such as benefit payments and tax filing online, and introduce digital health and education initiatives, Africa’s public-sector spending on Internet-related initiatives could rise sharply by 2025. Private investment, too, is likely to increase significantly as telecommunications operators continue to build out networks and as more companies begin digitizing their operations.
Transforming six key sectors
The Internet’s greatest impact in Africa is likely to be concentrated in six sectors: financial services, education, health, retail, agriculture, and government. Technology-related productivity gains in these sectors could reach $148 billion to $318 billion by 2025, and large populations stand to benefit as a result.
- Financial services. The Internet will reduce transaction costs and bring financial services to people who may live far from the nearest bank branch or ATM. With digital technology, more than 60 percent of Africans could have access to banking services by 2025, with more than 90 percent using mobile wallets for daily transactions and remittances.
- Education. Many schools that currently lack sufficient textbooks could soon access the world’s best educational content on affordable tablets or e‑books; teachers, too, will benefit from more effective training. The technology-related productivity gains in education could reach $30 billion to almost $70 billion—enabling governments to achieve more with their education budgets and providing millions of students with the foundation for a better future.
- Health. Today, Africa has only 1.1 doctors and 2.7 nurses per 1,000 people, and many people travel long distances for care. But the Internet is enabling greater use of remote diagnosis, treatment, and education. Technology-related benefits in health care could range from $84 billion to $188 billion by 2025—and the broader social and economic impact of improved health outcomes will be far greater.
- Retail. E‑commerce will open up a new shopping experience for Africa’s growing middle class. By 2025, it could account for 10 percent of retail sales in the continent’s largest economies, which will translate into some $75 billion in annual revenue.
- Agriculture. Farmers can access expertise and information on everything from weather, crop selection, and pest control to management and finance. It can also improve access to markets, generating better prices for produce.
- Government. The Internet is a powerful tool to improve transparency, streamline service delivery, and automate revenue collection, delivering productivity gains of $10 billion to $25 billion.
Despite a slow start, Africa’s digital development is now accelerating. As the continent grows more connected, it is already producing innovative web-based applications and dynamic new business models. For now, the Internet in Africa remains a wide-open space where companies can capture large opportunities if they move rapidly and decisively. Most exciting of all are the possibilities for using the Internet to revamp the delivery of education, health, and other public services—transforming lives in the process.
About the authors
James Manyika is a director of the McKinsey Global Institute, where Michael Chui is a principal;Armando Cabral is a director in McKinsey’s Lisbon office; and Suraj Moraje and Safroadu Yeboah-Amankwah are directors in the Johannesburg office, where Lohini Moodley is an associate principal and Jerry Anthonyrajah is a consultant.
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