Can internet access lead to improved economic outcomes?

For years the discussion on internet access in Africa had been on the digital divide. They felt the divide between the online and offline was too great. But something incredible has occurred. The access to the internet has grown tremendously across the continent and so has the economic growth. It is not a coincidence. People connect online and they learn to do things again; make money; and make things. Internet has been a tool of opportunities, from farmers checking the market price to freelancers serving clients from around the world.

The Numbers Behind the Connection

The numbers don't lie. In the last 10 years, Africa has seen the most rapid growth of Internet throughout the world. Now over half a billion Africans are connected to mobile broadband networks. Although it is not widely adopted, that is a huge step up from just a few years ago.

More significantly, data is much cheaper than it used to be. With competition between mobile network operators (MNOs) and infrastructure investments, the mobile phone costs have dropped. In Nigeria, Kenya and South Africa, a gigabyte is a mere fraction of what it cost five years ago. Cheap prices allow more people to regularly, rather than sporadically, be connected to the internet.

The economic effects of this growth can be quantified. According to a study by the World Bank, the broadband penetration rate in developing countries can contribute an additional 1.4 percent to the growth of gross domestic product when broadband penetration increases by 10 percent. In Africa, where penetration of broadband is still on the rise, the scope for further growth is enormous.

The Internet is creating jobs, how?The Internet is creating jobs – How?

Internet access' first and most obvious impact on economic growth is job creation. Not the old jobs, but new types of work not existed twenty years ago.

This has been one of the primary drivers of ecommerce. From sites such as Jumia, Konga and thousands of smaller online marketplaces, anyone who has a product can sell to customers outside of their local area. A small town tailor can sell to Lagos or Nairobi consumers. A farmer has multiple options where he can sell his produce, which will lead to lesser wastage and higher profitability. These transactions did not exist prior to the advent of the internet.

The gig economy has also established itself. Freelance platforms are a way to link African professionals to clients globally. An Accra graphic designer can serve London's company. Virtual assistant Nairobi can help business in New York. They work with foreign money and use euro money to spend in the country, while acquiring skills that boost their longer term earning power.

Internet access helps traditional work jobs in addition to direct Internet jobs. A mechanic who is able to find repair methods on the web is more efficient. Hairdresser who is promoting on Instagram gains more customers. A restaurant that is powered by online delivery apps is able to connect with those who would never have come through the door. The Internet is NOT a replacement for existing businesses.

The Entrepreneurial Explosion

The internet has reduced the hurdles to entrepreneurship. Traditionally, an entrepreneur had to invest in rent, inventory and marketing. There are many businesses that begin these days with only a smartphone and a social networking account.

Take into account the emergence of social commerce. In Africa, entrepreneurs are selling anything from clothes to catering using WhatsApp, Instagram and Facebook. They publish pictures, accept orders via chat and arrange deliveries. There is no required website. There is no need to advertise anything. Built-in customers are available along with a well-known interface.

This ease of entry has brought about an entrepreneurial explosion. In fact, young people, particularly, are beginning businesses at a faster rate than ever before. They don't wait for job openings. They are making their own opportunities. Often not all businesses make it through, but the volume of businesses creates economic activity, jobs and innovation.

Linking farmers to markets

In many African nations, agriculture still forms the core of their economy and provides jobs for most of the population, such as Nigeria, Ethiopia, and Tanzania. Farmers' lives are being revolutionised by the internet.

Information is the biggest and most obvious benefit. Internet connected farmers can buy up to know the market price before selling their produce. They have access to weather forecasts to make planting and harvesting plans. They can get to know new farming methods, pest control techniques, crop varieties and so on. This information is directly related to productivity and income improvements.

There are also more advanced applications that are starting to come out. The digital platforms put farmers in touch with buyers without involving intermediaries who take a high cut. Other platforms offer credit for farmers to buy seeds and fertiliser in advance of the growing season. There are others that provide crop insurance that can be accessed via a cell phone.

Its effect is great. Adopting digital tools regularly has been shown to improve income levels, reduce post-harvest losses and enhance the resilience of farmers to price shocks and weather extremes such as drought. Information by Internet does not stand alone, but complements traditional farming knowledge.

Improving access to education.Broader access to education.

Human capital is a key determinant of economic growth. Employees must have the skills that employers want to have. Students must be taught to be prepared for the economy of today. Technology such as the Internet is opening doors to new educational opportunities at every level.

Online learning materials are used to complement under-resourced schools, especially in rural areas. But a child in a village without a library can get access to thousands of free education websites online. Complex topics are explained using video lessons. Immediate feedback through practice quizzes. Discussion forums are a way to connect learners to fellow learners and teachers.

Online courses are a route to new careers for adults. Educational websites such as Coursera, edX and Udemy offer cheap and flexible learning. The worker can learn coding during the after-hours, marketing on the weekends, and project management during lunch breaks. These are skills which are directly related to improved employment and income.

It's especially pronounced in terms of women. Women are often denied access to formal education in many communities, due to cultural norms. These are overcome by online learning which can be accessed from home using a mobile phone. Women who never go to the university can get certificates, learn skills and launch businesses.

Improving Healthcare Delivery

The healthier the population, the higher the productivity. The internet is enhancing healthcare services across Africa, and bringing direct economic benefits.

Telemedicine is the new technology that enables those living in remote locations to see specialists without having to travel long distances. A patient at a rural clinic can video call to a doctor at a city hospital.

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