The role of technology in Africa's fast-growth economies
By Tracey Grose
The internet has quickened the pace of globalization by speeding the flow of information, creating access to new markets and enabling cross-border collaboration. The African continent is witnessing this as fast-growth economies emerge. The McKinsey Global Institute, the think tank of the global business consultancy, has released a series of insightful analyses on Africa's growing economies and the role of technology.
Africa's GDP is roughly equal to that of Brazil or Russia. While variations exist, 27 of the continent's 30 largest economies have quickened their rates of growth since 2000. According to McKinsey, the staying power of this growth will rely on Africa's ties to the global economy. While commodities drive much of this growth, the continent is gaining access to growing global capital. Global investment increased from $15 billion in 2000 to $87 billion in 2007, and Africa poses a higher rate on return than developed economies. For more, see: Lions on the Move: The progress and potential of African economies.
More than any other past innovation, the internet fosters global ties. Looking at the internet's contribution to GDP, Senegal and Kenya lead the continent although they do not represent the fastest growing economies. In both cases, the governments are stimulating internet demand. See: Lions go Digital: The internet's transformative potential in Africa.
African consumers are driving economic growth. Similar to China, 40 percent of Africans live in urban centers, and household discretionary spending is on the rise. McKinsey projects this spending will rise 50 percent in the next decade and reach $128 billion. See: The Rise of the African Consumer.
Given its proximity to Europe, there is strong potential for African economies to meet growing demands in Europe for agricultural products. Africa is host to 60 percent of the world's uncultivated arable land. And European companies should benefit from the continent’s growing demand for infrastructure and distributed energy systems. For more, see: Booming Africa: An opportunity for Europe.