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Digital Africa

South Africa is the fastest growing digital economy in Africa

According to a new study South Africa ranks as the fourth fastest growing digital economy in the world, coming in only after China, Malaysia and Thailand. Egypt, Kenya and Nigeria follow closely behind South Africa.

The study, titled Digital Evolution Index, was conducted by The Fletcher School at Tufts University, Massachusetts, and the results were revealed last month. South Africa’s excellent ranking is attributed to its high internet penetration, which has been augmented through its very high adult mobile phone penetration (86 percent).

In 2013 Africa’s overall internet penetration rate was 16 percent (167 million people). The study believes this figure will rise to 50% (600 million) by 2025. The proliferation of mobile networks is a key player in this prediction.

SA also leads Africa in digital readiness

“South Africa ranks 33 out of the countries measured by the index in digital readiness, which is defined by the markets’ ability to support and encourage digital commerce and payments,” says the study. The next highest country in Africa is Egypt (#48), followed by Kenya (#49) and Nigeria (#50).

“The Index positions South Africa as a ‘Break Out’ country with an overall score of 30 out of 100 in 2013. Its score jumped from 24 to 34 between 2008 and 2012, a substantial increase compared to other countries. While infrastructure investments in South Africa will drive e-commerce to achieve a likely 30 percent growth rate in 2014, the Index indicates that demand for e-commerce currently lags the global average.”

In some nice wordplay, Egypt, Kenya and Nigeria were dubbed “Watch Out” countries – countries with notable potential but challenges to be overcome. “There are currently 2.9 billion Internet users in the world, a feat that took over 20 years to achieve,” says Ted Iacobuzio, Vice-president of MasterCard Global Insights. “The next billion users will enter the market much faster than this.” He then adds that “A significant proportion of these will come from Africa, where the four countries studied – Egypt, Kenya, South Africa and Nigeria – all represent exceptional growth potential coupled with short-term opportunity.”

Article by KPMG Africa, Dec 19 2014.

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