The Internet’s contribution to Africa’s economy is 3.4 times lower than that of the developed world but its uptake of mobile is 3.4 times greater, according to research by McKinsey & Co.

Kinsey concluded that if Africa can close the Internet gap in the digital divide, it stands to gain US$300 billion — about the size of Nigeria’s economy today — that is if the Internet’s impact in Africa is a large as mobile’s has been, according to a report in BusinessTech.

The Internet’s iGDP in Africa averages 1.1 percent – half that of other emerging economies – but has the potential to increase 10-fold in the next 10 years, McKinsey reports

iGDP measures the Internet’s contribution to a country’s economic gain, according to yourstory.com. In Africa, that works out to be between US$18-$18.5 billion. Two thirds of that 1.1 percent is private consumption of Internet-related services and equipment,
including smartphones.

The remaining US$6 billion comes from public spending, infrastructure investment and business process outsourcing.

But despite the slow start, Africa’s digital development is accelerating, McKinsey said. As the continent grows more connected, it is already producing innovative web-based applications and dynamic new business models, according to the BusinessTech report.

“Today, Africa still lags behind other regions, but if it can bring Internet-related investment, adoption, and use up to the levels of other regions, the prize will be huge,” McKinsey said.

The composition of iGDP varies from country to country in the McKinsey sample.

For example, South Africa already has relatively strong Internet economies through strong e-commerce players, entrepreneurial hubs, and local business process outsourcing and software development companies.

South Africa’s iGDP contribution is 1.4 percent of the country’s total GDP — higher than Africa’s 1.1 percent average.

Private consumption accounts for the largest part of iGDP in Mozambique (85 percent), Ethiopia, Ivory Coast, Cameroon, Senegal, Kenya, and Ghana. Nigeria leads in public expenditure as a result of e-government initiatives.

Egypt has relatively high private investment generating 23 percent of its iGDP.

The continent has the potential to see iGDP contribution increase to as much as 10 percent of total GDP by 2025 if it uses the Internet and technology to catch up to “best-in-class” countries, the report said.

“If the Internet’s impact in Africa is as big as mobile voice’s, iGDP could jump to 10 percent or more than US$300 billion – roughly the size of Nigeria’s economy today,” McKinsey said.

Full iGDP potential for the continent can be achieved through taking advantage of a growing young and urbanized generation; producing cheaper smartphones; and
fostering more growth opportunities (such as BPO) through government initiatives and private business investments, BusinessTech reports.

Entrepreneurs in particular are a vital force in developing the Internet ecosystem, and have many opportunities in ICT as Africa builds its tech community and infrastructure, McKinsey said.

Governments must coordinate national vision to help achieve the continent’s potential, while private companies must innovate or lose out to the entrepreneurial drive. Large telecoms will need to prepare for voice-to-data migration, and along with other tech companies should partner with governments to drive the digital revolution, McKinsey said.

Can Africa Catch Up In Internet GDP?

“Public-private partnerships could make strides in delivering infrastructure, developing ICT capabilities, or delivering e-government, education, and health services,” McKinsey said. “For now, the Internet in Africa remains a wide-open space where companies and entrepreneurs can capture large opportunities if they are willing to move both rapidly and decisively.”