Thursday, May 25, 2006

Africa Is Coming Online!

Internet connectivity in Africa is growing at a faster pace than any other region in the world according to information from AllAfrica Global Media. Of course, it should be noted that this growth is coming on top of an extremely low base. Reports from a number of sources indicate that in terms of Internet connectivity, online advertising and e-commerce, many parts of Africa are making progress.

ClickZ, citing the CIA "World Factbook," reported that there are 23.5 million Internet users in Africa, "Of just over 900 million African residents, about 2.5% are online, compared to the worldwide average of 16%. Since 2000, the number of Internet users in Africa has grown 400%."

Many African users access via Internet cafes and other multi-user locations such as schools and offices, making an exact count difficult, but the International Telecommunications Union (ITU) estimates that the largest population of Internet users resides in Egypt with 3.9 million users, followed by South Africa with 3.6 million, Morocco with 3.5 million, Nigeria at nealy 1.8 million and Kenya with 1.5 million users.

Online advertising in South Africa, is expected to total R183m in 2006 ($29 million) and to be more than R200m in 2007, despite a reluctance within the country's advertising industry to spend money online. A survey conducted by World Wide Worx found that South African advertising agencies are either unaware of online advertising or doubt its effectiveness.
Nevertheless, "Online advertising is one arena of online activity in which SA has seen more growth than the US over the past four years, and where the growth rate for 2006 is similar to that in the US," said Arthur Goldstuck of Worx.

Because of the high cost of broadband Internet access, however, South African online retail sales grew by only 20% in 2005, down from a 25% growth rate of 2004. And, according to "Online Retail in South Africa 2006" from Worx, another 20% increase is likely in 2006.

"The biggest obstacle to growth identified by all the executives we interviewed continued to be speed of Internet access, and more specifically lack of affordable access to broadband," said Mr. Goldstuck. "But there is a realization that the growing experience levels of users will make a significant impact. We call it the 'Experience Curve,' and believe it's the key to online retail in South Africa."

The total spent on online retail goods in SA in 2005 was R514 million ($81 million), up from R428 million in 2004.

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