Wednesday, November 11,2020 / 05:19 PM / By Google Africa and IFC  / Header Image Credit: Google Africa and IFC 

The African Internet economy is one of the largestoverlooked investment opportunities of the past decade with potential forprofound impact on development. The mobile Internet is transforming life acrossthe continent with the support of growing local connectivity and mobility and adynamic, young urban population. With a potential to add up to $180 billion toAfrica's gross domestic product (GDP) by 2025, depending on the usage intensityof digital technologies by businesses, the Internet economy is improvingproductivity and efficiencies across large swaths of the economy, includingagriculture, education, financial services, healthcare, and supply chains.

The Internet economy's potential to play a pivotalpart in Africa's GDP growth has led to burgeoning investor interest. Buttressedby increasingly large liquidity events in African technology, even in the wakeof the pandemic, venture capital funding in Africa reached an all-time high in2019. There are signs that African venture capital funding is continuing itsforward momentum, despite near-term disruption caused by COVID-19. The totalamount of invested venture capital is still a fraction of total global venturecapital funding, especially relative to the size of Africa's population, butthis gap presents potential first-mover advantages for investors.

The COVID-19 pandemic has demonstrated that digitalstartups in Africa are able to provide innovative solutions when they areneeded most. For example, public sector partnerships with private healthcarestartups are increasing the availability of testing and have expanded thecapacity for medical recordkeeping. The continued operation of the informalsector - a major portion of Africa's economic activity - is supported bye-Logistics and e-Commerce supply chain startups. New partnerships and businessmodels like these will likely continue to influence startups across allindustry sectors, even beyond the COVID-19 pandemic.

Africa has the world's youngest, fastest-growing, andincreasingly urbanized workforce. These demographics, coupled with improvedlongevity and education levels, have led to a rise in the consumption of onlineservices. Additionally, heavily concentrated populations in Africa's cities aresupporting developer communities that attract new investors and talent pools.Rural populations also benefit from digital startups, and the Internet economyis critical to reaching and supporting the continent's 1.3 billion people.

The African Internet opportunity is driven by thetalent of young digital entrepreneurs. Startups are solving some of Africa'smost challenging issues, such as access to healthcare for remote populations,employment opportunities for women, and the ability to securely send andreceive money. Advanced technologies-tailored to data-driven, scalable, andpan-African approaches-are providing new ways for Africans to conduct businessand earn income. A robust collaboration between the private and public sectorsis imperative to ensuring that African entrepreneurs succeed, not only in theirhome countries and regions, but in the global marketplace. Startups, and theentrepreneurs who create them, are the future of the continent.

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