Vodacom on African Digital Economy and the Role of Smartphone Penetration
Diego Gutierrez the Chief Officer: International Markets at Vodacom Group talks about the importance of smartphone generation to help drive Africa’s inclusive digital economy.
The world has already witnessed the remarkable force of Fintech in Africa, powered by mobile money. In 2020 the continent’s transaction volume of mobile money was US$2.75 billion with 161 million active accounts. Combining the popularity of mobile money solutions with smartphone connectivity will drive even greater demand for financial services in Africa’s Fintech sector. For the unbanked and for people living in rural areas who do not have access to fixed infrastructure, mobile connectivity improves individual economic circumstances.
Between 2015 and 2020, smartphone adoption more than doubled in Sub-Saharan Africa, according to the GSMA’s most recent The Mobile Economy report. The report also estimates that, within the next five years, smartphones will make up 64% of internet connections in Africa. As smartphone adoption increases on the continent, Africa is experiencing a surge in e-commerce sales, with digital shoppers more than doubling between 2015 and 2021.
E-commerce has been a lifeline during the past two years, ensuring continuity during COVID-19 pandemic restrictions and reducing the health risks of physical cash transactions. Partnerships between e-commerce platforms and payment technology companies, such as Visa and Mastercard, have further expanded Africa’s online marketplace.
The opportunities afforded by e-commerce through the flexibility of smartphones and digital payment solutions can empower African entrepreneurs, particularly women, who face multiple challenges when starting or running businesses. The African Development Bank Group estimates a US$42 billion financing gap for African women across business value chains, even though the continent has the highest number of female entrepreneurs in the world.
Mobile digital platforms offer entry into new and bigger marketplaces independent of physical location, and democratise access to financial services. This can help to close the gender gap in e-commerce, which could add nearly US$15 billion to the value of Africa’s e-commerce industry between 2025 and 2030, according to findings by the IFC.
Smartphones are also transforming agriculture in Africa. Mobile digital technology enables farmers to access information and advisory services, financial systems and key markets, as well as assist small-scale farmers to overcome the many challenges preventing them from implementing more sustainable farming methods. One such initiative is Vodacom’s M-Kulima, a digital platform which helps Tanzanian farmers list produce on online marketplaces and connects them directly with buyers. M-Kulima provides timely weather forecasts and shares important market information, which ensures that farmers secure the best prices for their products. A connected smartphone in a farmer’s hand unlocks access to the digital economy and contributes to a more productive, inclusive and sustainable agriculture sector.
The rise of smartphone penetration is exciting for our continent’s future, but there are still barriers to overcome in realising this potential. Owning a smartphone does not necessarily ensure meaningful connectivity. As I’ve said previously, digital literacy and skills training remain critical factors in advancing digital and financial inclusion across the continent, as does coverage and infrastructure to support mobile digital services.
Vodacom continues to prioritise greater collaboration between the public and private sectors to drive down the cost of owning and using a digitally enabled device. Mobile connectivity is the key to bringing everyone into Africa’s booming digital economy, but smartphone adoption is just one step on the journey to realising this goal.
