The Post-Internet Economy

Let’s talk about Chris. Chris graduated from university in November 2014 with a Bachelor’s Degree in Mechanical Engineering. Since then, he has worked with a Nigerian digital marketing startup, an American non-profit organisation and a South African Fintech company (for seven months). All this time he has moonlighted as a UI/UX designer for a consulting company in Ikoyi, Lagos. He resigned from the South African Fintech company in January 2016 to work as a web developer for a Canadian bank, while retaining his part-time job with the consulting firm. Chris has not stepped out of Nigeria once in his life. In fact, the furthest he has ever gone out of Ibadan is to Calabar.

Chris’s uncle, Dare, is an advertising man. He has been with the same advertising company, AdLab, for 17 years. He started there as a National Youth Service corper in 1999 and gradually moved up to become the CEO, when the founder and first CEO left. Dare likes to tease Chris a lot. He calls him ‘an unfaithful husband’ because of the amount of jobs Chris has had in such a short period of time. Whenever Dare teases Chris, the younger man just smiles. His uncle thinks he is unfaithful, but he thinks he is like many other young people of the 2010s. The way in which the world is set up now, the growth of the Internet, remote working and job mobility have made it easier than ever for people to get jobs in almost any part of the world without having to change geographical location. And they can change jobs whenever they feel unsatisfied with where they are.

The ubiquity of the Internet, the rise in smartphone use and the falling price of Internet data have brought us what is called the ‘Internet Economy’ or the ‘Digital Economy’. This refers to business that is being done through markets that have infrastructure based on the Internet. Sometimes called the ‘Web Economy’, it has created a world where it is possible for a young university graduate living in South Africa, for example, to get a job with a company in the US without having to relocate there.

The way in which the world is set up now, the growth of the Internet, remote working and job mobility have made it easier than ever for people to get jobs in almost any part of the world without having to change geographical location.

The Internet Economy

In 1858, Karl Marx started working on a section of his Grundrisse, which he titled ‘The Fragment on Machines’. In it, Marx painted the picture of an economy (the machine) whose main force of production would be information. He wrote that the machine could be built for nothing, add no value (or cost) to the production process, and would, over time, reduce price, profit and labour costs of everything involved. Today, 158 years later, we are seeing some of Marx’s thoughts come to life. Now, someone can start an e-commerce business and run it without so much as inventory of his own. Now, someone can start a hotel business without so much as a building of his own. We see these in Jack Ma’s Alibaba group and Brian Chesky and Joe Gebbia’s Airbnb.

In 1995, the term ‘Digital Economy’ first appeared in Don Tapscott’s book The Digital Economy: Promise and Peril in the Age of Networked Intelligence. In it, Tapscott identified three main components of the Digital Economy: supporting infrastructure, e-business, and e-commerce. More than 20 years later, countries where this Digital Economy has been allowed to thrive have seen it contribute up to 8% of the GDP. Across the G-20, the Internet Economy amounted to 4,1% of their collective GDP, or USD2,3 trillion, in 2010.

How does this affect Africa?

According to James Manyika and Charles Roxburgh of McKinsey and Company, “If Internet were a sector [of the economy], it would have a greater weight in GDP than agriculture or utilities. And yet we are still in the early stages of the transformations the Internet will unleash and the opportunities it will foster.”

As beneficial as the Internet Economy can be to a nation’s economy, however, African governments have been too slow and seem too incompetent to create an environment for it to thrive. Many of them are still stuck in the past, trying to catch up with the Industrial Age while ignoring the huge opportunities in the present time. Africa’s biggest challenge is not a lack of Internet access – although that in itself is a problem (less than 10% of Africans have access to the Internet, although the continent has seen a 7 415,6% growth in the last 16 years). The problem is the economic environment that government policies and actions have created. According to eTransform Africa, a flagship report produced by the World Bank, the AfDB, and the African Union, Africa has experienced slower ICT-inspired growth than any other region of the world in the past two years. Although data pricing has become competitive in most parts of the continent, only a few Internet-based companies are thriving. And this is due to the atmosphere around the continent. It is generally unwelcoming to new, disruptive ideas.

Income levels and standard of living also play a part in this. So, despite the many benefits of the Internet Economy, if a people’s standard of living and income levels are low, they will be less likely to buy into the new economy in a manner that can lead to remarkable effects. Both these factors explain why Africa is at the level that it is. (Age and literacy levels also have significant effects on adoption).

In ‘The Fragment on Machines’, Marx painted a picture of an economy (the machine) whose main force of production would be information. Today, 158 years later, we are seeing some of Marx’s thoughts come to life.

But the people will not wait around forever…

Life must go on for the young Padawans. If the mountain will not come to Muhammad, Muhammad must do the needful and walk over to the mountain, no matter how long it takes. Africa’s young demographic is exploding. There are at least 200 million Africans aged between 15 and 24, and that number will most likely double by 2045, according to the 2012 African Economic Outlook. Because the Internet has done a good job of breaking down geographic (and age) restrictions, these young Africans growing up in the (mobile) Internet age see all these opportunities out there, and without regard for whatever barriers there are, they go for them.

This is why Chris, who started his web-developing career in Nigeria, has decided to sell his services abroad. Chris constantly complains to his uncle Dare that Nigerian companies hardly appreciate his work. He earns more working for the Canadian bank than he did working for the Nigerian startup. As a matter of fact, he felt the Nigerian startup used the position of ‘intern’ to get him to work his butt off while paying him peanuts. While the South African company paid him more than the American non-profit did, he felt the people he was working with did not quite understand him.

It’s hard to blame Chris as much as it is hard to blame the African companies he worked for. The continent has not quite grasped the Internet and the younger generation as much as other, more developed regions have. And because of that, many companies on the African continent cannot compete with the benefits that are offered elsewhere.

ACKNOWLEDGEMENT: David Adeleke contributed to this article.