Digitalisation is regarded as a growth frontieri n Africa, according to Safroadu Yeboah-Amankwah, Director and Managing Partner at McKinsey, South Africa.
McKinsey Global Institute says digital flows, which were practically non-existent just 15 years ago, now exert a larger impact on GDP growth than trading in goods.
“The world has changed dramatically over the past five years, we have gone from good and finance dominating world trade to data trade dominating global trade,” said Yeboah-Amankwah.
“The implications are profound, finance and good trade has flattened and trade of data flow such advertising, media and services that are flowing across the borders as digital products have seen positive growth.”
He said African countries needed to improve the momentum as currently trends were dominated by western economies.
“Singapore, Netherlands and United States are dominant markets as far as data flows are concerned. China is also seeing growth following the entry of Alibaba into this space,” Yeboah-Amankwah said.
He said the outlook is positive if digital platforms that factor small to medium enterprises are created. He says this will see SMEs trading at a global stage.
Yeboah-Amankwah also urged governments in Africa to remove frictional costs which he said hampered growth in the sector.
“There are frictional costs around logistics, currency, tax and trust when people are trading in this space,” he added.
“The real opportunity for the government is ensuring that frictional costs are addressed so that trade between people who don’t know each other flows easily with no frictions of trust and tax.”