KPMG Says Digitisation Will Enable Accelerated Growth In Africa

VENTURES AFRICA – Digitisation – migration from analogue to digital technology – will help to bridge the digital divide between emerging markets and developed economies, according to global financial services firm, KPMG.

KPMG stressed that as digitisation impacts the telecommunication and broadcasting sectors, enabling growth in both, it would also cause a ripple effect on growth in other sectors.

“In fact, it is estimated that digitisation will bring about a further drop in telecommunications carriage fees, and drive growth in ARPUs (average revenue per users), thereby increasing profitability and allowing content producers to focus on better material,” says Joseph Tegbe, Partner in Management Consulting Advisory, West Africa Lead – Technology, Media and Telecommunications at KPMG Nigeria.

Reducing unemployment

According to KPMG Research, digitisation also impacts unemployment rates, GDP growth, as well as the literacy levels of countries thus narrowing the gap between developing and developed economies.

Tegbe adds that the film industry, agriculture, financial service, agriculture, consumer market, healthcare and education sectors will also feel the impact of digitisation, as it reduces unemployment and grow GDP.

“Analysis reveals that an increase of 10 percent in a country’s digitisation score fuels a 0.75 percent growth in its GDP per capita. As an economic accelerant, digitisation therefore is 4.7 times more powerful than the 0.16 percent average impact of broadband deployment on per capita GDP,” adds Tegbe.

He added that as digitisation advances in countries, its economic effect accelerates. Hence, economies most digitally constrained receive the least benefit, with the absence of an ICT ecosystem necessary for full utilisation of digitalisation benefits lacking.

KPMG argued that adoption of digital technology would mean data and information increase, which in turn would bring about a rapid shift in the African economy from the present state to a knowledge economy, efficiently closing the gap between the rural and urban areas and thus improving literacy.

Enabling business growth

Tegbe further noted that business models are being reshaped by digitisation as it lowers entry barriers, whilst expanding enterprise market reach.

“In terms of a go-to-market strategy, it is changing how companies build brands and products, communicate, and provide services to their customers,” he says, stressing that companies largely use social media to build brands nowadays, with close to 40 percent of companies with online presence “using the web to research items that they buy in physical outlets. Digitisation is also enabling companies to create products tailored to customers’ tastes.” he says.

Among other things, the report noted that digitisation has had the greatest impact on the way companies organise and operate to generate competitive advantage, creating more global entities and redefining the concept of office space.

Digitisation and Broadband penetration

Digitisation’s importance is massive, according to the report, it is however important to know that broadband drives the growth digitisation bring.

“Broadband creates an enabling environment for businesses and governments. Therefore, it improves overall productivity and creates jobs,” says Tegbe.

Building of broadband infrastructure as well as its increasing penetration will bring about various job opportunities.

With the Nigeria National Broadband Policy and Rollout Plan projected to grow to 30 percent broadband penetration by 2017, broadband and Internet access is set to significantly increase in the next three years, with the growth opportunities the increase brings driving economic growth.

Governments helping ICT growth

Although the challenges to the development of ICT in Africa are enormous, so are the opportunities created by the need to meet these challenges. Governments across the continent are therefore expected to create an enabling environment.

Tegbe, who noted that the public sector in Africa has shown readiness to foster ICT growth on the continent said it was essential for companies to embrace digitisation and assist governments in meeting their connectivity goals.

The report stated that 48 countries in Africa had developed National ICT strategies with various initiatives being established throughout the continent to address shortage of IT skills as at 2012; one of such is Nigeria which has introduced several initiatives as an offshoot of its National ICT policy.

This post was first published on Ventures Africa HERE

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