State of the African digital economy

In 2012, Africa’s digital economy was estimated at roughly 1.1%, or US$30 billion of its GDP.¹Kende, M. (2017). Promoting the African Internet Economy. In 2020, estimates indicated a contribution of 4.5%, or US$115 billion. This growth is expected to continue in the coming years. A 2020 study by Google and the International Finance Corporation (IFC) found that the digital economy could contribute US$180 billion (5.2%) to the continent’s GDP by 2025, and US$712 (8.5%) billion by 2050 (Table 12). Reasons behind this estimated growth include better quality internet connectivity and improved access, vibrant startup ecosystems, growing tech talent pools, and improvements in policy and regulatory frameworks (including the launch of the African Continental Free Trade Area).²Google and the International Finance Corporation [IFC]. (2020). e-Conomy Africa 2020. Africa’s $180 billion Internet economy future.

Table 12. Contribution of the internet economy to African GDP (iGDP).³Google and the International Finance Corporation [IFC]. (2020). e-Conomy Africa 2020. Africa’s $180 billion Internet economy future.

Some countries are on an especially rapid trajectory (Table 13). For example, by 2025, the share of the economy powered by the internet in Kenya, Morocco, Senegal, and South Africa will be between 7% and 9%.⁴Accenture. (2022). Tuning into Africa’s digital transformation.  

Table 13. Contribution of the internet economy to African GDP (iGDP) in some selected countries.⁵Google and the International Finance Corporation [IFC]. (2020). e-Conomy Africa 2020. Africa’s $180 billion Internet economy future.

E-commerce, fintech, healthtech, and media and entertainment are among the sectors that drive the growth of Africa’s digital economy and the continent’s overall digital transformation.⁶Google and the International Finance Corporation [IFC]. (2020). e-Conomy Africa 2020. Africa’s $180 billion Internet economy future. 

The e-commerce picture across Africa is one full of contradictions. On the one hand, the e-commerce industry has grown considerably in the past decade, due to a combination of factors, such as growing internet penetration rates, the spread of mobile telephony and mobile money services, and increased use of credit cards and access to bank accounts. On the other hand, the average index of e-commerce readiness of African countries is still low compared to other developing regions and developed countries (Table 14).

Table 14. Regional values for the UNCTAD B2C E-commerce Index, 2020.⁷United Nations Conference on Trade and Development [UNCTAD]. (2021). The UNCTAD B2C E-commerce Index 2020. The index measures the readiness of countries to engage in online commerce. It is a composite indicator including four indicators: internet use penetration, secure servers per 1 million inhabitants, credit card penetration, and a postal reliability score.

There is also a significant disparity among countries when it comes to their participation in e-commerce. Table 15 provides a list of the top 10 developing countries and transition economies in the UNCTAD B2C E-commerce Index by region, showing the countries that have scored the highest in Africa in 2020. Within the overall index, the African countries that score the highest are Mauritius (58.4), South Africa (56.5), Tunisia (54.6), Algeria (52.2), and Ghana (51.9), while Burundi (8.3), Chad (7.1), and Niger (5.6) have the lowest scores.

Table 15. Top 10 developing and transition economies in the UNCTAD B2C E-commerce Index 2020, by region.⁸United Nations Conference on Trade and Development [UNCTAD]. (2021). The UNCTAD B2C E-commerce Index 2020.

In 2020, Africa had over 600 unique business-to-consumer online marketplaces for physical goods. Only 10 marketplaces attracted 84% of the overall web traffic to such platforms. The top 10 countries with the largest number of marketplaces were South Africa, Morocco, Tunisia, Egypt, Algeria, Kenya, Senegal, Nigeria, Ghana, and Côte d’Ivoire. Most marketplaces were not open to sellers from foreign countries: Only 20% of the marketplaces were operating in multiple African countries or worldwide, but they represented almost 75% of all marketplace websites in Africa.⁹International Trade Centre [ITC]. (2021). African Marketplace Explorer.

There are several challenges for African countries to take advantage of e-commerce.  

These can be found across three layers: a) the digital society considered broadly, which encompasses challenges related to access to infrastructure, cybersecurity, and capacity development on digital issues, for example; b) the digital economy, which depends on the provision of services, such as electronic payments, digital signatures, and cloud computing; c) e-commerce more specifically, which encompasses issues related to trade facilitation, access to markets, and the observance of basic principles, such as transparency and non-discrimination (Figure 40). 

The regulatory framework also shows some important gaps at the national and regional levels. The speed with which African governments have adopted laws, policies, and regulations to foster e-commerce and the advancement of the digital economy varies significantly.¹⁰United Nations Conference on Trade and Development [UNCTAD]. (2020). Member States of the WAEMU eTrade Readiness Assessment.