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Metaverse: Virtual economy to pump $40bn into African GDP

SETH ONYANGO, BIRD STORY AGENCY

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

That translates into 3 trillion US dollars globally with Africa accounting for some $40 billion.

The model provided by Analysis Group (AG) implies that the metaverse’s share of the global economy will reach 2.8 per cent by its tenth 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 per cent for APAC, 0.9 per cent for Canada, 0.4 for Europe, 4.6 per cent for India, 5.0 per cent for LATAM, 6.2 per cent for MENAT, 1.8 per cent for Africa, and 2.3 per cent for the United States,” the report, released on Monday, May 16, 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 10th year 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 12×12 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, South Africa.

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

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

First, it calculated a single statistic that summarizes 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 one hundred people between 2007 and 2019, implying a global CAGR of mobile technology adoption of 23.3 per cent.

By region, the CAGR of mobile technology adoption ranges from 12.2 per cent in Canada to 83.9 per cent 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 actualize 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 is projected to grow from $100 billion in 2022 to over $1.5 trillion by 2029, at a CAGR of 47.6 per cent 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 cyber-attacks in the environment. An increase in cyber-attacks and high sensitivity issues environment may hinder the market growth,” it said.

By The African Mirror

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