While venture capitalists and private equity executives from the UK, US, Middle East, Singapore, Hong Kong, France and Germany expect a Sub-Saharan African boom with higher than forecast GDP growth, this upswing could be stifled by any underestimation of the role of the internet.
This is according to research presented by blockchain-based MNO World Mobile.
The MNO said the IMF predicts Sub-Saharan Africa’s economy will expand by 3.7% this year and 4% next year. At the same time nearly three-quarters (74%) of venture capitalists and private equity executives expect GDP growth in the region to be 4%-plus this year, with one in five (21%) predicting 4.3% or higher.
For 2023, 90% expect GDP growth to beat the IMF forecast of 4% with more than two out of five (43%) predicting 4.5% growth or higher. Respondents have cited efforts to improve internet connectivity as part of the reason for the positive sentiment.
Research showed that in terms of the importance of improvements to internet connectivity in driving economic growth, around 57% of respondents said it is extremely important, while 29% believe it is important. Around 12% say it is important along with other factors, while just 1% say it is not very important to economic development.
The positive forecast comes with the proviso and Mobile World warns that innovation could be held back if businesses fail to recognise the importance of internet connectivity.
In June this year, the company surveyed senior executives at companies with combined annual revenues of US$6.75-billion based in Angola, Botswana, Cameroon, Ethiopia, Ghana, Nigeria, South Africa and Tanzania.
The senior business executives expressed the belief that improving internet connectivity is vital to continuing economic growth in Sub-Saharan Africa, where around 28% of the population are connected to the internet.
Around 27% of executives said it is important to boosting growth, while nearly two-thirds (65%) say its role in boosting economic growth will increase over the next three years as societies become more digital and technology focused.
Micky Watkins, CEO of World Mobile said: “Global economic growth is being hit by the fallout from the Russian invasion of Ukraine and the widening impact on food and fuel prices along with rising interest rates in the US.
“Countries in sub-Saharan Africa which are commodity importers are particularly affected, so it is good to see that venture capital and private equity investors on the ground believe that the economic outlook is more optimistic than thought by the IMF.
“They are right to highlight the importance of internet connectivity to economic development and it will only grow in the future, particularly for areas where delivering affordable and reliable connectivity remains an issue. World Mobile’s network based on the sharing economy sells affordable network nodes to local business owners, so they have the power to connect themselves and others while sharing the rewards. This will enable more people to access the opportunities that internet connectivity creates.”