Proprietary + Confidential

e-Conomy Africa 2020:

Africa’s $180 billion Internet economy future
Executive summary
 Proprietary + Confidential

Africa’s $180B Internet economy future

Growing urban, mobile population Expanding tech ecosystem

Digital connectivity Tech talent

1.3B
people in 2019
40%
of population in 2019
700K
developers in 2019

10% increase leads to 2.5%

2.5B
increase in GDP per capita

people in 2050 Urbanization E-commerce and fintech are key

sections driving the digital economy
45%
of population will be in cities by 2025

Infrastructure investments Pro-innovator regulation

Drives increased access to more Including startup acts and regional
affordable higher-speed Internet harmonization, such as the African
Continental Free Trade Area (AfCFTA)

Source: e-Conomy Africa 2020.

 Proprietary + Confidential

Key takeaways
Digital consumption growth is fueled by a fast growing urban and mobile population
A growing urban and mobile population brings tremendous potential to the economy. Internet penetration is 40% today and a 10%
increase in mobile Internet penetration can increase GDP per capita by 2.5% in Africa, compared with 2% globally. Increasing Internet
penetration to 75% has the potential to create 44 million new jobs.

Tech ecosystem driven by dynamic developer and startup landscape

Tech talent in Africa is at a historical peak and continues to rise annually. There are 690,000 professional developers across Africa with more
than 50% concentrated in 5 key African countries: Egypt, Kenya, Morocco, Nigeria, and South Africa. While there are challenges confronting
startups in the African ecosystem, there remains an abundance of opportunities and increased venture capital inflow to the continent.

Internet infrastructure investments are further boosting connectivity

Infrastructure drives increased access to more affordable and higher-speed Internet. Tech companies’ investment in subsea and
terrestrial fiber-optic infrastructure has led to rapid growth in international Internet capacity. Google’s own submarine cable, Equiano, is
expected to be completed in 2022.

Pro-innovator regulation can benefit the African Internet economy

Regulatory inconsistency can hamper market access and limit investment opportunities for startups. Startup acts and regional harmonization are
initiatives that are driving mutually beneficial growth. It is important for entrepreneurs, investors, and policy makers to continue dialogue,
encouraging environments where digital businesses can thrive.
 Proprietary + Confidential

Africa’s economy has significantly expanded

over the past decade

1.7% Key takeaway: Gross

domestic product
EU-28
(GDP) grew by 4% per
year between 2010 and
2019, more than twice
that of the EU-28 (1.7%)
and Latin America (1.7%)
over the same period.
1.7% 4%
LATAM Africa
 Proprietary + Confidential

By 2025, the Internet economy

has the potential to contribute
$180 billion to Africa’s economy
growing to $712 billion by 2050 2050

Over the next five years, COVID-19 is expected to delay economic $712B
growth both in Africa as well as the rest of the world. However,
the resilience of the Internet economy, coupled with private
consumption, strong developer talent, public and private
investment, investments in digital infrastructure, and new
government policies and regulations will continue to drive this 2025

growth in Africa.
2020
$180B
$115B

Source: Accenture, “Africa iGDP Forecast, Africa,” September 2020.

CONSUMPTION GROWTH Proprietary + Confidential

A variety of sectors are leading the way in

Africa’s digital transformation

Fintech Health tech

Startups building solutions to support the population that is financially excluded

but gaining access to mobile technology. Fintech startups remain the top Media and entertainment
destination for funding, receiving 54% of all startup investment in 2019.

e-Commerce e-Mobility

Growth driven by improvement payments landscape, rise in mobile tech, and

mobile money tech adoption. In 2019, $134 million in funding was attributed to
B2B logistics
e-Commerce, indicating both an increase in funding and number of deals.

Key takeaway: Companies in the Internet economy have generally outperformed other sectors of the economy.

Source: Partech Africa Team. “2019 Africa Tech Venture Capital Report” (Partech Partners, Paris, January 2020).
CONSUMPTION GROWTH Proprietary + Confidential

Africa is experiencing rapid population growth

and urbanization

45%
Urban population expected to grow by 190
million people, leading to 45% of Africans
2019 2050
living in a city by 2025
1.3B 2.5B
79%
Consumers in large urban areas spend 79% more
than the national average on goods and services
87% population growth in Africa
between 2020 and 2050

Source: Somik Venay Lall, J. Vernon Henderson, and Anthony J. Venables, “Africa’s Cities: Opening Doors to the World” (Washington, DC: World Bank, 2017),
Damian Hattingh, Acha Leke, and Bill Russo, “Lions (Still) on the Move: Growth in Africa’s Consumer Sector,” Perspectives on Retail and Consumer Goods 6 (Autumn 2018), McKinsey & Company.
CONSUMPTION GROWTH Proprietary + Confidential

Increase in digital connectivity will directly boost

Africa’s economic value

40% 11% 2.5% increase in GDP

Number of people with Over the next decade, the A 10% increase in mobile
Internet access has grown number of Internet users in Internet penetration increases
to 522.8 million, or 40% Africa will grow by 11%, comprising GDP per capita by 2.5% in Africa,
of the population 16% of total global amount compared with 2% globally

Source: International Telecommunication Union (ITU), “Economic Contribution of Broadband, Digitization, and ICT Regulation: Econometric Modelling for Africa” (research paper, ITU Publications, Geneva, 2019).
EXPANDING TECH ECOSYSTEM Proprietary + Confidential

Tech talent is young and growing fast, with

690,000 professional developers across Africa today
Country Professional developers % total of Africa Africa developer population
South Africa 120K 17%

Egypt 85K 12%

Morocco 45K 7%

Nigeria 85K 12%

Kenya 60K 9%

Ghana 15K 2%
Rwanda 5K 1%

Ethiopia 20K 3%
Tanzania 15K 2%
Uganda 10K 1%
Ivory Coast 10K 1%

Rest of Africa 220K 32% 0 120,000

Africa total 690K 100%

Source: Google/Accenture, “Africa Technology Ecosystem, Africa,” April 2020.

 Proprietary + Confidential

EXPANDING TECH ECOSYSTEM

University

Top 2 developer training 33%

pathways are through university
programs and self-taught
Self-taught
Developers use a mix of both formal and informal
education channels to gain skills and access well-paying
31%
jobs, and many developers view a career in software Developers
development as an avenue for social mobility. by education On-the-job
16%
Google aims to train 100,000 developers across Africa
Online school
in 5 years through Google Developers Training, with the
10%
commitment through 2022.
Bootcamp
10%
Source: Google/Accenture, “Africa Technology Ecosystem, Africa,” April 2020.
EXPANDING TECH ECOSYSTEM Proprietary + Confidential

Women comprise one in five of the total population

of developers in Africa
African and U.S. developer gender distribution

U.S. junior developers (less than 6 years experience) Leading African educators

Male Female Developer & entrepreneurial

85% 15% training to females in Ivory
Coast; 1K+ graduates
African developers

Male Female Tech & entrepreneurship

79% 21% training for females of all
ages across Uganda

Key takeaway: While this number is still low, the growth of the ecosystem has begun creating
many opportunities for women coders, especially in Egypt, Morocco, and South Africa

Source:
Source:Google/Accenture,
Google “Africa Technology Ecosystem, Africa,” April 2020.
EXPANDING TECH ECOSYSTEM Proprietary + Confidential

Venture capital investment in Africa reached an

all-time high in 2019
Venture funding in Africa (in U.S.$ M)

2500 250

Key takeaway: The first half of 2020

2000 200 closed with $493.5M of total funding.

1500 150
The full impact of COVID-19 is yet to
1000 100
be realized, and as investors become
more risk averse, the landscape will
500 50 likely shift away from early and seed
stage investments towards
0 0
companies that are more established
2015 2016 2017 2018 2019
with clearer paths to profitability.
Funding Deals

Source: Partech Africa Team. “2019 Africa Tech Venture Capital Report”
Briter Bridges, “State of Funding in Africa, Quarterly Bulletin”.
EXPANDING TECH ECOSYSTEM Proprietary + Confidential

Access to early stage and pre-seed funding is still

lacking across most of the continent
Has it been difficult for your startup to gain access to funding?

Yes, it has been very difficult

No, not at all

46.2% Key takeaway: In a 2019 survey,
2.1% 82% of African startups reported
No, not very much difficulties in accessing funding.
4.2% Yes, it has been difficult Key issues include insufficient seed
35.5% funding, limited follow-on funding,

No, only somewhat

and a lack of angel investors.

11.8%

Source: Google/Accenture, “Africa Technology Ecosystem, Africa,” April 2020.

 Proprietary + Confidential

INFRASTRUCTURE INVESTMENTS

Ongoing investment in International Internet bandwidth, 2007–2018

subsea and terrestrial 11

infrastructure will enable 9

increased access to 7

more affordable and

Tbps
higher-speed Internet 5

3
Digital infrastructure is the backbone of the Internet
economy around the globe and Africa. 1

International Internet bandwidth has increased by a factor of 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
10 over the past decade, to 12 terabits per second (Tbps).

Africa North Africa Sub-Saharan Africa

Source: Africa Bandwidth Maps, Hamilton Research, Bath, U.K.

 Proprietary + Confidential

INFRASTRUCTURE INVESTMENTS

Technology companies Lisbon, Portugal

are continuing to improve

African connectivity
by expanding their
undersea cable networks Lagos, Nigeria

The first phase of Google’s new submarine

cable, Equiano, is expected to be completed in
2022, connecting Portugal and South Africa.
Equiano
The cable is expected to have 20x the capacity of the cable route
last cable built to serve the region, allowing for more
latency-sensitive products to function and be developed. Cape Town, South Africa

Branching unit

Source: Google.
PRO-INNOVATOR REGULATION Proprietary + Confidential

Government support is increasingly crucial to the

success of startup ecosystems and developer populations

Regulatory inconsistency can complicate or impede market access and

limit investment opportunities for startups, impacting startup viability and
investment decisions.

Startups in many Africa countries must navigate complex regulatory environments

with multiple regulators and agencies. As businesses move and grow into new countries
and new markets, they need to scan each regulatory framework separately.

Given the technology-related regulatory challenges governments are facing,

it is important for entrepreneurs, investors, and policymakers to continue dialogue,
encouraging environments where digital startups and businesses can thrive.
PRO-INNOVATOR REGULATION Proprietary + Confidential

Startup acts and regional harmonization are initiatives

that are driving mutually beneficial growth

Startup acts, such as Regional harmonization, and

the Tunisian Startup Act, infrequent regulatory changes, are
sends a strong signal key to startup success. The African
that the government Continental Free Trade Area
recognizes the importance (AfCFTA) agreement is one major
of entrepreneurship and milestone toward harmonization
will incentivize it. for digital businesses.
 Proprietary + Confidential

PRO-INNOVATOR REGULATION

AfCFTA has the potential to

unite a market of 1.3 billion
people and a combined
GDP of $2.6 trillion
The AfCFTA aims to reduce tariffs on 90% of all goods
and facilitate free movement of goods, services, capital,
and people.

It will enable Africa’s regional economic communities to

become more integrated and easier to access, including
the ability for startups to scale across Africa seamlessly.

Source: Trade Law Centre (tralac), “African Continental Free Trade Area (AfCFTA) Legal Texts and Policy Documents”.