The internet economy is expected to contribute at least $7.2 billion (Sh 786 billion) to Kenya’s GDP this year, an 7.70 percent increase from last year.
A new report by Google and IFC also projects that the Internet of Things (IoT) will grow the country’s GDP by 12.48 percent in the next five years and by 15.17 percent by 2050
Kenya’s Information and Communications Technology Sector has experienced an average growth of 10.8 percent annually since 2016, making the rise of the digital economy possible. The internet has since become a source of employment and economic development as the country adapts technology in almost every sector.
The report cites Safaricom’s Mpesa as one of the innovations that has promoted financial inclusivity lifting “two percent of Kenyan households out of poverty by increasing per-capita consumption.”
According to the report, Africa’s infrastructure challenges have been partially addressed by Fintech products including Kenya’s Mpesa, Fawry in Egypt and Paystack62 in Nigeria.
Safaricom’s latest data shows that as of 2019, Mpesa had 23.6 million active members and the numbers were increasing monthly hitting 35 million in March this year.
“Savings and lending, through services like M-Shwari, Fuliza, and KCB M-Pesa, grew at more than 100 per cent annually. International remittances through M-Pesa grew at 44.6 per cent year-on-year, and payments at 11 per cent year-on-year, of which consumer-to-business rose 30.6 per cent,” reads the report in part.
The report also says that Africa’s internet economy has the potential to hit $180 billion (19.6 trillion) by 2025.
“Currently, it contributes nearly $115 billion (Sh12.5 trillion) to the continent and is expected to grow to $712 billion ( Sh77.7 trillion) by 2050.” the report says.
However, due to the Covid-19 pandemic, a delayed subsequent growth is expected in Africa and the rest of the world.
“However, despite these headwinds, Accenture’s analysis suggests that by 2025, the Internet economy has the potential to reach 5.2 per cent of the GDP in Africa, contributing almost $180 billion to Africa’s total GDP.”
The adaptation and usage intensity of digital technologies by business, coupled with the right policies, will greatly drive the country’s growth potential.
Kenya has an advantage as it leads all African countries in its iGDP potential, meaning its internet has the highest chance of contributing the most to the GDP, which signals a bright future.
African firms have benefited from about $350 million (Sh39 billion) worth of funding towards innovations in the sector in Q1 2020. A study by Briter bridge breaks down the funding per country: South Africa ($112 million), Nigeria ($74 million), Kenya ($62 million), and Egypt ($51 million) leading the way as the top funding destinations.
Google’s accelerator programme has supported ventures in Kenya including Twiga Foods, which raised $30 million.