Africa rarely positively leads on the global scene but this does not mean that nothing good is happening on the continent.
Even though the Covid-19 has hot the continent leading to massive losses just like elsewhere in the world, it is noteworthy that 19 of the top 20 fastest-growing countries in the world are in Africa. The continent has registered increased urbanization where an increasingly young and educated population is driving higher consumption of online services.
In addition, the continent is on the cusp of witnessing the implementation of the world’s single largest free trade zone through the African Continental Free Trade Area (AfCFTA), enacted in May 2019.
Despite the negative macroeconomic outlook as a result of Covid-19, the African Internet economy is expected to be resilient.
One of the largest overlooked investment opportunities of the past decade for the African continent is the Internet economy which has the potential for profound impact on development.
The mobile Internet is transforming lives 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 US$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.
The Internet economy’s potential to play a pivotal part in Africa’s GDP growth has led to burgeoning investor interest. 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 the 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.
The Covid-19 pandemic has demonstrated that digital startups in Africa are able to provide innovative solutions when they are needed most.
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.
Covid-19 has forever changed online shopping behaviours, according to a survey of about 3,700 consumers in nine emerging and developed economies conducted by UNCTAD and Netcomm Suisse eCommerce Association.
The survey shows that consumers in emerging economies have made the greatest shift to online shopping.
Read also: The gold mine in Africa’s ‘internet economy’
“The COVID-19 pandemic has accelerated the shift towards a more digital world. The changes we make now will have lasting effects as the world economy begins to recover,” said UNCTAD Secretary-General Mukhisa Kituyi.
He said the acceleration of online shopping globally underscores the urgency of ensuring all countries can seize the opportunities offered by digitalization as the world moves from pandemic response to recovery.
Africa has the world’s youngest, fastest-growing, and increasingly 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.
The African Internet opportunity is driven by the talent of young digital entrepreneurs who 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.