July 28, 2016    4 minute read

The Internet And Africa: A New Chapter

Breaking New Grounds    July 28, 2016    4 minute read

The Internet And Africa: A New Chapter

Goals for Africa’s “fourth industrial revolution” may not be so out of reach after all. The figures speak volumes of what may truly become an avenue of tremendous growth for the continent. By 2020, Africa will have 700 million (more than twice the projected number in North America) smartphone connections. The mobile broadband connections will triple in the next five years, making the mobile industry account for 8% (double that of the rest of the world) of Africa’s GDP by 2020.

With global IP network supported devices at 26.3 billion by 2020, it may come as no surprise that the Cisco Visual Networking Index Complete Forecast for 2015 to 2020 shows that internet traffic in Nigeria will grow six-fold. Strengthened by an increase in broadband speed, the one to five networked devices per capita that will become a reality in 2020, may serve as a window of opportunity for great growth in the Nigerian markets.

Nigeria may be able to make significant steps in taking advantage of the internet of things. By 2020, internet video will account for 79% of global internet traffic.

Some Obstacles

There are, however, significant concerns about the dependence on mobile and broadband networks that may grow as a result of this growth in internet connectivity in Nigeria. Such dependence may undermine goals of cyber security and personal privacy. Distributed Denial of Service Attacks, which account for up to 10% of a country’s total internet traffic, if not controlled properly, may pose significant threats to the viability of many networks in Nigeria as they are projected to grow in occurrence on a global scale from 6.6 million to 17 million.

79% will be the percentage of video
in total global traffic by 2020

Risks of over overdependence may be more favourable than risks of many Africans not being able to take advantage of the power of the internet. With only a third of Africans having access to grid electricity, they may find themselves struggling to drive industrial development in their continent. This may be a contributing factor to the fact that only 17% of individuals in the continent have access to mobile broadband.

There are lights of hope that may guide the continent and its budding entrepreneurs and employees towards greener economic pastures. Major infrastructure developments are underway to fortify and expand the networks. The collaboration between governments and private companies to aid the development of internet activity in Africa is in the best interests of all involved as a potential $300bn in GDP (contributed by the internet) is at stake.

The unique nature of many African nations calls for unique approaches to investments in each economy. African technology investor Mbwana Alliy identified the good policies for technology in Kenya, relatively strong education and infrastructure in South Africa, and the connection between consumers in Nigeria as reasons for their attractive but unique opportunities.

An Attractive Opportunity

The rising value of African companies cannot be ignored by potential investors. The growth in internet activity in Africa is sure to create a new market environment that will likely be open to M&A deals and other financial activities. M-Pesa Mobile Money, for example, had more than $5bn move through its mobile accounts in December of 2015, while Jumia Group of Nigeria was recently valued at $1bn. The development of more apps along with the growth in internet use in Africa could be the key to human development in the nation. Inspired by technology and skill shortages, other firms are looking to complete the digitisation of land records and medical diagnostics. Such moves promise to increase knowledge sharing in the country.

With each new year, downward pressures on the costs of the average smartphones increase. While this may make it easier for many Africans to access the internet, the cost of data still poses significant issues. The skills gap in the technology sector of Africa may not be a great hindrance but rather an opportunity to reorganise the educational sectors of many African nations in ways that may redefine the sectors such that many other nations of other continents may not be able to due to their ageing populations. If a culture can be forged to support such goals, one may find the next Silicon Valley not in the West but in Africa itself. Laughable? Maybe. But possible? Most definitely.

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