Without deep insight into the current state of play in Africa’s economies, it’s impossible to make informed business decisions, including where and how to spend marketing budgets
We partnered with the International Finance Corporation (IFC) on the Google/IFC e-Conomy Africa report to identify five key trends in Africa’s digital economy — and paired them up with suggestions for actions you can take today to position your business for what’s next.
1. Africa is experiencing rapid urbanisation — position your business to be helpful
Africa’s 68 cities, each home to over one million inhabitants in 2020, are projected to increase to 85 by 2025.1 By then, Africa’s urban population is predicted to grow by 190 million people, meaning that just under half (45%) of all Africans will be living in a city.2
In some countries, such as Nigeria, Ghana, and Angola, the proportion of urban residents will increase to over 80% of their total population by 2050, when 800 million more Africans will have moved to urban areas.3
We know that urbanisation can drive growth. In Africa’s large metropolitan areas, the amount of money spent on consumer goods and services is typically 79% higher than the national average.4 Given better connectivity in urban areas, those that choose to relocate to cities have more access to innovative technologies. This can broaden employment opportunities and create larger markets for commerce, driving financial and social inclusion for more people.
Actions you can take today:
- Be helpful to first-time Internet users who may need support
- Stay on top of emerging trends about these new consumers with Audience Insights
- Understand how to untangle the ‘messy middle’ of the online purchase journey for those shopping online for the first time
2. Africa’s demographic boom fuels consumption — be socially responsible
Young African consumers are becoming more affluent and globalised as they grow to become household decision-makers. The proportion of the population that is of working age will continue to rise.
By 2050, Africa will have the only decreasing dependency ratio (a measure of how many individuals are supported by one working person’s salary; a lower ratio means fewer people rely on a single income for their living expenses) globally.6 This boosts the continent’s competitiveness in both skilled and unskilled labour, and will lead to increased spending power for consumers.
According to the African Development Bank, there are over 350 million middle-class people in Africa.7 Excluding South Africa, a growing middle class in Sub-Saharan Africa is spending over $400 million per day.8 By 2030, Africa is expected to be home to over 1.7 billion consumers with total consumer expenditure of $2.5 trillion.9
Action you can take today:
- Be socially responsible. It’s not just the right thing to do as consumption booms, but it’s also good for business as a brand’s stance on sustainability and social issues is important to shoppers.
3. Mobile devices are the most common means of Internet access — invest in your app
Across Africa, 60% of the population is accessing the Internet through their mobile phones.10 By 2025, 167 million more people from Sub-Saharan Africa will have subscribed to mobile services, making it a total of 623 million users — and smartphone connections in the region will more than double.11 In the next decade, the number of Internet users in Africa will grow by 11%, representing 16% of the total global amount.12
Actions you can take today:
- Invest in your app’s user experience
- Where possible, enable your services to work offline
4. The informal sector hosts a major portion of economic activity — make your services accessible
The vast majority of workers in the informal sector — the part of the economy that is neither taxed nor overseen by the government — own a mobile phone, which they tend to use for both private and business purposes. Mobile phone ownership in the informal sector is broadly correlated with access to digital connectivity at the national level.
To date, most successful ventures in the African Internet economy address challenges faced by businesses or workers in the informal sector.13 This kind of support is critical for the overall sustainability of Africa’s economies. The large-scale diffusion of mobile money in several African countries, such as Kenya, Ivory Coast, and Mali, is a case in point.14
Actions you can take today:
- Offer a variety of payment options to make transactions as easy as possible
- Where possible, provide your services via low-data or zero-rated channels like AMP pages or USSD
5. Africa’s developer population is young and growing — reassess your hiring pipeline
The growth of Africa’s technology ecosystem, talent pool, and innovation hubs goes hand-in-hand with the rise of local developer talent. Software development and IT are spreading their influence and affecting how industries are run across the world — especially in Africa, where the effects of leapfrogging desktop computing are particularly pronounced.
Tech talent in Africa is at an historical high and continues to rise. There are nearly 700,000 professional developers across Africa with more than 50% concentrated in five key African markets: Egypt, Kenya, Morocco, Nigeria, and South Africa.15
Through the rise of informal education channels, increasing gender diversity, and more proactive government support, software development is becoming more accessible to wider audiences. Universities train 33% of software developers in Africa, while 31% are self-taught.16 And online schools and bootcamps combined, which continue to grow, produce 20% of developers.17 On-the-job training makes up the fifth pathway for the remaining 16% of developers.18
African developers skew very young, with junior developers making up a large portion of the developer base. In African countries with smaller and more nascent developer populations, 43% of developers have only one to three years of experience, compared with 22% in the United States.19
Actions you can take today:
- Adjust your expectations around where a developer has gained training, and watch out for bias against hiring younger talent
- Pay attention to the diversity of your hiring pipeline and source more candidates if the short list is not meeting diversity requirements
Just like the findings in our report, the pandemic and its aftermath have taught us that Africa’s resilience and innovation are alive and well. But if we are to sustain our economies, we’ll need to be responsible in how we relate to consumers each day.
