Digital economy capable of transforming Africa

By Khulile Thwala

The United Kingdom (UK) Department of International Trade has found that Africans’ use of mobile devices for services such as mobile money, which is available in Eswatini, and access to the internet, is advantageous to create a thriving digital market.

According to the UK Department, accessing the internet through desktop or laptop computers has not been an option for people in Africa, owing to cost and availability. For that reason, the mobile phone has been the primary tool for accessing the internet on the continent. As mobile becomes the pre-eminent platform for digital services in the world, what seemed like a challenge is likely to place Africa in an advantageous position.

AfricanBusiness.com states that what is required is increased access to devices, improved network coverage, more affordable data services, digital education and localised content and services for users on the continent, as it seeks to bridge the digital gap.

According to the United Nations, internet business in Africa could add E3 trillion to the continent’s GDP by 2025. A white paper from the United Kingdom Department for International Trade titled “The rise of Africa’s digital economy – tackling the ‘usage gap’ to create a thriving market for mobile services” assesses these issues and offers some recommendations on how Africa and African users can be brought further into the digital mainstream.

The white paper details how African consumers, along with others in the rest of the world, have made a rapid shift to mobile services. Unlike in other regions where access is largely through mobile applications, however, most African users tend to access digital services through mobile network operator (MNO) portals.

The evidence stated in the UK department’s paper is that the digital market is growing rapidly in Africa. It is reported that in South Africa, the subscription-based economic model is currently worth E8.9 billion and is set to grow 14 per cent a year to reach E13.9 billion in 2025.

“Netflix is available in all countries and has recently launched a mobile-only subscription options for users in the continent. Some 4.89 million Africans currently subscribe to video-on-demand services and it is expected that number could rise to 13.72 million by 2027. Local operators including Showmax are also growing,” indicates the UK Department.

It is also reported that pandemic-era measures brought the focus on e-learning. The market was estimated to be E41.9 billion in 2021 throughout the continent, according to a report from the IMARC Group, and is expected to hit E79.9 billion by 2027. The report contends that e-learning is meeting the challenge posed by the growing need for quality education, which classroom teaching cannot fully address.

Mobile services will be instrumental in expanding access to these services. The inability to read or write also prevents a lot of people on the continent from experiencing digital content and services. Other users also struggle to discover and engage with digital services due to their lack of know-how.

The UK department is of the notion that providing content in a local language, which requires fewer data will enable more people to engage. Mobile money services are some of the options that providers have to monetise their offerings.

Reliable payment channels are essential for digital services to thrive. In Africa, where a lot of the population is unbanked and economies are largely cash-based, this would have been a major challenge without the emergence of mobile money and direct carrier billing.

There are about 1.35 billion mobile money accounts in the world currently, most of them in Africa. In 2021, about E16.9 trillion in transactions were carried out over these platforms. Payments to merchants are increasing, accounting for an average of E93.4 billion in transactions a month, up from E47.5 billion in 2020.

However, the GSMA’s Global Adoption Survey found that more than 90 per cent of mobile money providers do not have this feature, while merchant payments are still predominantly offline. To get to these benefits, industry stakeholders will need to work together to address structural barriers such as reach and the usage gap.