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How e-commerce is transforming Africa

How e-commerce is transforming Africa

Dec 18, 2014

From IT-Online

E-commerce is at the epicenter of Africa’s thriving economy and, with internet penetration rapidly spreading across the region, this represents huge potential which has hitherto been untapped.

According to McKinsey and Co, consumer facing industries in Africa are predicted to grow by over $400-million in 2020. This includes e-commerce, which is gaining momentum throughout the region.

Africa Internet Group, an e-business with nine companies active in over 25 countries across Africa, evaluated the top seven countries for technology and e-commerce growth in the region, with the help of independent studies, field surveys and research. McKinsey offers a new and insightful way to estimate the importance of e-commerce – known as iGDP, it measures the percentage that e-commerce contributes to the GDP of a country. iGDP presents a realistic picture of how e-commerce shapes the economy of a country.

The seven countries in Africa where iGDP is significant and why it is in the spotlight for AIG’s ventures, investors and venture capitalists are as follows:

* SenegalThis country leads the pack in Africa with an iGDP of 3,3%. Initiatives like the Jjiguene Tech Hub – Jjiguene means ‘woman’ in Wolof – are designed by women for women in Senegal, it aims to help women enter the world of IT driven businesses. The potential for this initiative has been recognized by a number of investors including IT giant Microsoft.

* KenyaClose on the heels of Senegal is Kenya, with an iGDP of 2,9%. The previous president of Kenya launched a $14,5-billion project earlier this year to build a city to shape African tech businesses – something similar to the Silicon Valley; called the African Silicon Savannah. This city is designed to become a hub for outsourcing of BPO operations and general IT support, as well as helping to foster growing businesses.

* MoroccoThis north African country is growing fast and is well-positioned to become Africa’s financial center. With projects like Casablanca Finance City and Casablanca Technopark, it isn’t surprising that their iGDP is 2,3%. King Mohammed VI of Morocco is on his way to realizing his dream of making Casablanca the financial hub of Africa and attracting investment to help companies tap into the huge Franco-African market. There are over 100 companies in the Technopark already.

* MozambiqueOn the international radar as one of the top three African countries with rapid growth. Recent collaborations with China have further enhanced their agricultural industry and, in addition to this, real estate and hospitality opportunities are abundant. It is among the top five economies in Africa which have made significant progress in the IT sector. Mozambique now has an iGDP of 1,6% and this looks set to increase as IT underpins many other areas of growth in the country.

* NigeriaThe pride of Africa, being its largest economy. It has an iGDP of 1,5% and is also the e-commerce hub of Africa with businesses like Jumia and Kaymu being popular among the fashion conscious urbanites who do not shy away from making purchases online. IT is thriving in Nigeria and, apart from multiple technology hubs, there are several accelerators in Nigeria to help start-ups and to facilitate IT based businesses.

* South AfricaFollows Nigeria closely with an iGDP of 1,4%. It is among the most economically developed nations in Africa and it is one of the most receptive. South Africa has IT hubs all along the Western Cape province – among which is the city of Stellenbosch is known as the Silicon Valley of South Africa – but growth needs to be accelerated as other African countries are steaming ahead with investment into the IT sector.

* Ghana – Though last on the list here, with an iGDP of 1,1%, it is definitely not the least. Only recently, the president of Ghana promised to build an IT city near Accra – the capital – with a total investment of about $5,2-billion. Plans involve building a tower which aims to be the tallest in Africa.

Apart from the top seven, Egypt, Tanzania and Cameroon are additional countries in which businesses are thriving and growing. Africa is the second fastest growing region in the world and it is attracting investors across multiple sectors.

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