Virtual economy bodes well for Africa’s GDP

Continent set to account for 1.8% of metaverse’s share of global economy, forecast suggests

Economists from Analysis Group forecast a universal adoption of the metaverse could contribute 2.8% to global gross domestic product (GDP) in just a decade, with Africa contributing 1.8%.

That translates into $3-trillion (R47.3-trillion) globally with Africa accounting for about $40bn (R631.2bn).

The model provided by Analysis Group (AG) implies that the metaverse’s share of the global economy will reach 2.8% by its 10th year.

The 2.8% figure includes big regional variations.

“By region, the metaverse’s share of regional GDP in the 10th year is 2.3% for APAC [Asia-Pacific], 0.9% for Canada, 0.4% for Europe, 4.6% for India, 5.0% for LATAM [Latin America], 6.2% for MENAT [Middle East, North Africa and Turkey], 1.8% for Africa, and 2.3% for the US,” the report, released on Monday last week, reads in part.

Due to the nature of the metaverse, it is seen as a straightforward addition to the world economy, rather than as a redeployment of existing resources.

“Because these numbers do not account for any displacement of GDP from other industries that may occur over the 10 years, they can be viewed as a lower bound on the metaverse’s share of 10thyear GDP,” the report reads.

The metaverse is already real in Africa, at least for some businesses.

MTN Group, Africa’s largest mobile operator, in February purchased plots of digital land in the continent’s metaverse, Ubuntuland.

The telco secured a 12x12 village (144 plots of real estate), adding that it intended to boost its customer attractiveness through a series of experiences merged with consumer passion points, like gaming and music, in Ubuntuland.

M&C Saatchi Abel as well as TV personality and social media superstar Botumelo Thulo also made purchases at Ubuntuland’s February 28 launch event, held in Sandton.

Innovations in Africa are expected to keep pace with the global expansion of the global virtual economy.

In its analysis, AG quantifies the potential impact of the metaverse on GDP by applying the model of mobile technology.

First, it calculated a single statistic that summarises the level and speed of mobile technology adoption: The compound annual growth rate (CAGR) of mobile broadband subscriptions per 100 people over the 2007-2019 sample period.

Globally, mobile broadband adoption increased from 6.2 to 76.9 subscriptions per 100 people between 2007 and 2019, implying a global CAGR of mobile technology adoption of 23.3%.

By region, the CAGR of mobile technology adoption ranges from 12.2% in Canada to 83.9% in MENAT.

It then calculates the contribution of the metaverse to GDP in the 10 years following the beginning of adoption, assuming that a small increase in metaverse adoption has the same marginal impact on GDP growth as a small increase in mobile broadband adoption.

But Africa, just like the rest of the world, will need to deploy new technologies, innovations and discoveries before it can reap the benefits of the metaverse.

According to tech expert and venture capitalist Matthew Ball, core elements that need to come into place for the metaverse to actualise include concurrency (allowing multiple computations to happen at the same time), the adoption of standards and protocols, and the on-ramp experience.

Fortune Business Insights has said the global metaverse market was projected to grow from $100bn (R1.5-trillion) this year, to more than $1.5-trillion (R23.6-trillion) by 2029, at a CAGR of 47.6% in the forecast period, 2022-2029.

The analysis notes a few challenges, including security concerns, a lack of public awareness, and government rules and regulations.

“Also, major leading players have faced a loss of billions of dollars owing to cyberattacks in the environment.

“An increase in cyberattacks and high sensitivity issues environment may hinder the market growth,” it said.