Kenya second in Africa in Internet contribution to GDP – Report

November 22, 2013
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, INTERNET AFRICA

Africa’s rapid adoption of internet technology and solutions is increasingly contributing to the growth of economies across the continent, with Kenya among the leading countries reaping from the internet.

Kenya marginally trails Senegal in the internet’s contribution to GDP, according to research by McKinsey. The report titled Lions go digital, shows the internet contributed 2.9 percent to Kenya’s Gross Domestic Product while Senegal led the pack with 3.3 percent of its economy benefiting from the Internet.

“Africa’s iGDP (measure of 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,” states the McKinsey report.

Other African countries that appeared above the continental average include; Morocco, Mozambique, South Africa, Cote d’Ivoire, Tanzania, Cameroon and Ghana.

The report attributes rapid growth of the internet in Africa to expansion of mobile networks and availability of affordable smart phones. More than 720 million Africans have mobile phones with some 167 million already use the internet.

“There is a growing wave of innovation as entrepreneurs and large corporations alike launch Web-based ventures, from e-commerce sites and digital entertainment platforms to mobile health technologies and online educational content.”

The report links the adoption of internet solutions to efficiencies in the delivery of public services and the operations of large and small businesses alike. With the current growth rate, McKinsey estimates the internet will contribute $300 billion in Africa and have 600 million internet users by the year 2025.

Key areas where the Internet will generate economic growth and social transformation include; financial services, education, health, retail, agriculture and government.

“In financial services, for example, M-Pesa’s mobile money solutions have brought millions of Kenyans onto the financial grid for the first time,” explains the report.

In addition to measuring the size of 14 African internet economies that together make up 90 percent of Africa’s GDP, the report evaluates the strength of five fundamental pillars of Internet readiness; National ICT strategy, infrastructure, business environment, access to financial capital, and the development of ICT-related human capital.

 

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