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Africa ICT

Africa ICT

Africa is among the faster growing markets worldwide. Improving macroeconomic indicators, conducive business environment, larger, younger & more affluent population, rising middle class – are the key indicators of not only a source of capital but of job creation, skills development, technology transfer, infrastructure development, responsible governance and most of all – of sustained growth with long-term diversification and transformation of African economies.

  •  50+ Countries with a population of over 1 billion.
  •  African ICT market is estimated to be over $35 billion in 2014.
  •  ICT seen as a catalyst for development and, is high on the agenda of most African governments.
  •  Most African countries now live under stable or relatively stable regimes pursuing free market economics.
  •  Fast growing region – huge domestic market potential; Growing economically at more than 5% per year.
  •  Abundant and untapped resource pool.
  •  Incentives and red carpet offers from many countries.

Country Profiles

Understanding Africa’s Potential

Africa’s Diversity

Africa is the second largest continent after Asia and represents a territory larger than America, China and Europe combined. Africa holds some of the world’s largest natural resource deposits and 60% of the world’s uncultivated arable land. The continent boasts of over 900 million people i.e. about 14% of the world’s population, it is also the second most populated continent with a population that is set to double to 2 billion over the next 40 years. However, Africa only represents less than 3% of the world’s GDP.

Africa is extremely diverse, its 53 countries are at significantly different stages of development. Africa is far more democratic now than at any previous time although coup threats and civil wars remain prevalent in some regions and democratically elected leaders often remain in place for decades. Economies vary in size from South Africa (GDP of around $350 billion) to tiny Sao Tome and Principe (with GDP of around $3.42 billion). The levels of economic growth also vary from a negative (-1.5% GDP) growth rate in Mali to nearly 15% percent per annum in Libya. South Africa and Nigeria have by far the highest number of formal registered businesses. South Africa’s informal sector is relatively small compared to the rest of the continent, at 30%, whereas the figure for Tanzania is 60%. South Africa’s population is nearly 60% urbanized, while 90% of Burundi’s population lives in non-urban areas.(World Development Indicators: 2014¬)

It is encouraging to note that donors are increasingly aware of this diversity, and are placing greater emphasis on the need to tailor their support to each country’s specific circumstances.

 Rank Country GDP Growth Rate(%)
 1 South Sudan 36.20
 3 Ethiopia 10.30
 4 Liberia 9.90
 5 Democratic Republic of Congo 9.30
 6 Cote d’Ivoire 9.00
 14 Mozambique 7.40
 18 Chad 7.30
 19 Mali 7.20
 21 Sierra Leone 7.00
 22 Tanzania 7.00
 23 Rwanda 7.00
 24 Niger 6.90

world-gdp

It is one of the fastest growing regions in the world, with a forecast real GDP annual growth rate of 5.5% till 2017, only behind china propelled emerging Asia.

Economic growth in Africa

Economic growth in Africa is expected to show steady upward trend in coming years. According to IMF’s Regional Economic Outlook Report-2014, the economic growth forecasts suggest Africa will continue to grow rapidly at 5.7% CAGR to 2017. The growth is expected to be evenly distributed among a large number of countries in the region, which includes both the oil exporting and low income countries.

 Africa Regions GDP (CAGR) 2005– 09 2010 2011 2012 2013 2014 (P) 2017 (P)
 Central Africa  4.1  5.9  4.4  5.8  3.7  6.2  5.7
 East Africa  7.1  7.3  6.3  3.9  6.2  6.0  6.2
 North Africa  4.9  4.3  4.3  9.4  1.9  3.1  5.5
 South Africa  5.2  3.7  3.9  3.3  3.0  4.0  4.4
 West Africa  5.7  7.1  6.9  6.9  6.7  7.2  7.1
 Africa  5.3  5.2  3.6  6.4  3.9  4.8  5.7

Part of this rapid GDP growth relates to improved international trade and an accelerated pace of foreign direct investment and investments being made in infrastructure sector including ICT and mining. FDI has increased from $15 billion in 2002 to $37 billion in 2006 and $46 billion in 2014.

In the decade of 2003-2012, US, UK, Europe, China and India have been the biggest Investors in Africa. In 2013, US provided the largest official development assistance followed by France and UK whereas China did the maximum trade with Africa, followed by US and India.

Africa is extremely diverse, its 53 countries are at significantly different stages of development. Africa is far more democratic now than at any previous time although coup threats and civil wars remain prevalent in some regions and democratically elected leaders often remain in place for decades. Economies vary in size from South Africa (GDP of around $350 billion) to tiny Sao Tome and Principe (with GDP of around $3.42 billion). The levels of economic growth also vary from a negative (-1.5% GDP) growth rate in Mali to nearly 15% percent per annum in Libya. South Africa and Nigeria have by far the highest number of formal registered businesses. South Africa’s informal sector is relatively small compared to the rest of the continent, at 30%, whereas the figure for Tanzania is 60%. South Africa’s population is nearly 60% urbanized, while 90% of Burundi’s population lives in non-urban areas.(World Development Indicators: 2014¬)

It is encouraging to note that donors are increasingly aware of this diversity, and are placing greater emphasis on the need to tailor their support to each country’s specific circumstances.

map-with-logoMany major multinational corporations have invested in Africa, both in natural resources, infrastructure, goods and services. Large brands such as Unilever, Diageo, ShopRite, GAP, Yum Foods, Parmalat and Wal-Mart (purchased a majority share in a local retailer Massmart) have entered Africa’s consumer market.
Africa’s contribution to global GDP remains small at 2.7% but growth experienced has put total consumer spending in Africa ahead of Russia and equal to India. The rise of the middle class, as a percentage of the population, has been steady – in 1980, 111 million or 26% of the continent’s population fell in this category rising to 151.4 million or 27% of the population in 1990 with a further surge to 196 million in 2000 and a dramatic increase to 313 million in 2010 equating to 34.3% of the population (African Development Bank, 2011). The current trajectory suggests that the African middle class will grow to 1.1 billion (42%) in 2060. Whilst the growth has been phenomenal there is a wide disparity among income levels across the continent spending between $2 and $20 a day (defined by The African Development Bank (AfDB)). Morocco, Algeria, Tunisia, Egypt and Gabon have the highest concentration of middle class among their populations. Tunisia tops the list, with a middle class that makes up 90% of its population.
Growth in Africa, in fact is, being mainly driven by the consumption of goods and services – retail, financial services and telecommunications, its consumption accounting for two thirds of Africa’s GDP growth. Possession of cars and motorcycles in some of the countries like Uganda, Ghana, Nigeria, Kenya etc. has risen by close to 50% in the past five years. Internet penetration, on the other hand which is still relatively low at 120 million users is growing rapidly – the growth rate between 2000 and 2011 was 2,527%, compared with a world average of 480%.

Africa’s middle class has tripled over the last 30 years, with one in three people now considered to be living above the poverty line

Over the last decade and half, African countries have seen a significant improvement in the per capita GDP. According to IMF, between 2000 and 2013, sub Saharan countries experienced an increase in the median per capita GDP of 75%. Nearly 15 countries are considered to have medium to high human development. Countries that are not primarily commodity exporters such as Ethiopia, Rwanda and Tanzania have also shown a marked improvement in the Human Development Index (HDI) due to rising contribution of the services sector and ICT to the GDP. Countries having a higher GDP per capita tend to be highly correlated with countries with better human development indices. The following graph illustrates the Human development indices of different countries in Sub-Saharan Africa over the period between 2000 and 2012.

Employment

Major part of labour force in Africa is employed in the informal sector requiring limited skills and capabilities. By 2020, it is estimated that more than half of Sub-Saharan Africa’s population will be below the age of 25. This would make it imperative that the countries in the region are able to create sufficient employment opportunities for the young population. Development of the services sector along with other conventional sectors like agriculture and mining, to enable better deployment of this large pool of resources, providing the region a distinct advantage in ensuring economic growth. The strategy would also enable the countries to avoid social and political unrest in the future, a problem which many countries in the region have experienced in the past. African countries are taking a proactive step to ensure labour productivity in both agricultural and services sector to make the output of economic activity more competitive. Effort is also being made to focus on activities that have higher value-add content.