Internet economy presents a major opportunity for Africa
Many African countries have made significant progress toward creating an Internet sector, with broad sector reforms and focus on increasing broadband availability. However, there is still much work to be done to strengthen the Internet sector and to create an Internet economy in Africa.
This is according to a report by Internet Society titled "Promoting the African Internet Economy" which looks at Internet adoption and usage by companies and governments throughout Africa.
The study says Internet access infrastructure is no longer the roadblock to Internet adoption that it once was. While it is not available to everyone, and not affordable to all people, in many countries mobile broadband is now available to a far higher proportion of the population than are using it, it adds.
A focus on building the Internet sector is critical for development, but will have an ultimately limited impact on the size of the economy, says Internet Society.
The study says the Internet's contribution to gross domestic product (GDP) in Africa is low relative to other developed and emerging economies. Internet-based companies currently represent a single digit percentage of the economy of most African countries, it adds.
In developed countries, the Internet contributes up to 3.7% of GDP on average, while in African countries it's just 1.1%, says the report. In Organisation for Economic Co-operation and Development countries the Internet sector makes up 3% to 5% of the workforce countries, but in developing countries only 1%.
Policy must focus on deepening the Internet sector, to ensure all users and organisations can go online, with good quality access that is affordable and supported by online skills training, says the study.
Two areas of focus should be: online platforms that can support further online growth, ranging from mobile money services to online employment platforms and supporting entrepreneurial efforts to allow innovative new companies to emerge, says Internet Society. These platforms themselves can grow into entire ecosystems that propel broader economic growth, it adds.
"The result will be an Internet economy that offers business-to-consumer services online with new opportunities for all citizens, business-to-business services to make the economy more efficient, and e-government services for all that are inclusive and reach all citizens." This will enable growth and opportunities within the country, while also allowing all in the country to fully interact with the global digital economy, buying and selling goods, and providing services around the world, says the study.
If the Internet begins to match or exceed the levels seen in other countries, the impact on the continent's economic and social development could be immense, says the study. As it stands today, there are already signs of growth of the Internet economy in some African nations - but there is great disparity across and within countries on the continent, it added.
However, a thriving Internet economy in Africa could be put at risk by the increasing number of Internet shutdowns in the region, says Internet Society.
Africa needs a secure and reliable Internet infrastructure that users trust to bring large and small businesses online, along with governments and other social services," says Dawit Bekele, Africa region bureau director for Internet Society.
"In addition to the economic costs, Internet shutdowns also affect trust. If people don't know whether they will have connectivity, they can no longer rely on that connectivity to build Internet-based businesses. This will affect entrepreneurs in greatest need of digital-led innovation for their own future, and the future of the Internet economy in Africa."