The enthusiasm with which information technology, whether it be e-commerce, social media or FinTech, is being embraced in emerging markets is far greater than many realise.
The sheer potential of this megatrend is best understood when we consider the current and future size of the internet-user base in many emerging market (EM) countries.
Take China, for instance. Its 731 million online population is larger than that of the EU and US combined, with many more people still to be connected – almost half the country still remains offline.
This is typical for many EM countries. And, importantly, this unconnected mass of people often does not reside exclusively in less-developed rural areas, as one might imagine. In Brazil and China, for example, more than 38% and 34% of the urban population respectively are not connected to the internet. Even in the United States, Japan, United Kingdom and Germany the proportion of unconnected urban dwellers remains quite high at 22%, 15%, 13% and 12% respectively .
This is significant, as the cost of connection is relatively low for city dwellers, meaning that additional user growth can come very fast. What’s more, in emerging markets, governments are increasingly adopting technology to raise efficiencies and bring down costs – so staying offline may not be an option.
Our conviction in companies like Naspers, Alibaba and Tencent is in no small measure driven by these strong underlying dynamics. Our holdings here are all building robust digital ecosystems – competitive ‘moats’ – and thus ensuring that they can continue to tap into this expanding demand, both in their domestic markets, and increasingly abroad.
As megatrends go, this is one that we as long-term investors get very excited about.
 Source: Statista, IHS Markit and Wireless Broadband Alliance