Kenya, Senegal lead in internet GDP contribution in Africa

Kenya and Senegal are the African countries with the largest share of the Internet’s contribution to Gross Domestic Product (iGDP), a new report by McKinsey & Company, a global management consulting firm, has shown.

Despite the two nations not being the continent’s largest economies, this achievement was reached through the countries' respective governments' concerted efforts to stimulate Internet demand that has driven private consumption, which accounts for more than 85 per cent of GDP in each country, the report, titled ‘Lions go digital: The Internet’s transformative potential in Africa’ says.

McKinsey & Company’s study examined the progress and potential of the Internet in 14 economies that together make up 90 per cent of Africa’s GDP: Morocco, Algeria, Egypt, Senegal, Côte d’Ivoire, Nigeria, Cameroon, Ethiopia, Kenya, Tanzania, Mozambique, Angola, South Africa and Ghana.

According to the report, it is worth noting that Kenya and Senegal’s high scores on the dimension of national ICT strategy alone could have been the impetus for their iGDP today.

‘Lions go digital: The Internet’s transformative potential in Africa’ explained that Senegal’s government, for instance, was one of the first on the continent to invest in fibre-optic infrastructure and prioritise the rollout of Internet cafés. Besides, its e-government project has directed resources to digitising education, public administration, and health-care services.

And even though Senegal has a higher iGDP today, Kenya may be better positioned for the future, given its trade surplus (0.3 as a percentage of GDP) and its track record of working closely with the private sector to drive investment.

Kenya’s ICT board is focused on implementing a long-term national vision, facilitating investment, and encouraging innovation in both the private and public sectors, McKinsey & Company said in its report.

It also observes that Africa’s iGDP – which stands at 1.1 per cent – remains low since it is just over half the levels seen in other emerging economies and less than a third for developed countries:
“Senegal has a contribution of 3.3 per cent, Kenya has 2.9 per cent, Morocco has 2.3 per cent, Mozambique 1.6 per cent and South Africa 1.4 per cent”.

In a bigger picture, Senegal ranks higher than Germany, India and France while Kenya ranks higher than Canada and China, the report states; the average for emerging markets is 1.9% while that of developed economies is 3.7%.

The study expects internet’s greatest impact in Africa to be concentrated in six sectors: financial services, education, health, retail, agriculture, and government. It suggests that technology-related productivity gains in these sectors could reach USD 148-318bn by 2025, with large populations standing to benefit as a result.

But to maintain, their current lead, however, both countries will need to improve their infrastructure and cultivate a workforce with ICT skills, , and Senegal could also benefit from focusing on access to capital, the report says:

“These priorities could make iGDP in both countries less dependent on private consumption and more in line with the iGDP of developed countries”.