According to a digital payments and commerce report with EBANXa global fintech company connecting local payment methods from Africa, Latin America and India with global digital commerce, Africa has emerged as a frontier for the new class of online consumers, accounting for an estimated 10 million new consumers in 2024 and trailing only Asia as a region.
Driving The News
While digital commerce is growing by 13% annually in developed countries, online sales are expanding fastest in Africa at a rate of 25%, according to Payments and Commerce Market Intelligence (PCMI).
By 2026, the digital commerce market is expected to reach $72 billion in total value in its top five markets: Egypt, Kenya, Morocco, Nigeria, and South Africa. Over the next decade, Africa will add more to consumer spending than Europe.
Digging deeper
As the vast majority of Africans do not have access to traditional financial services, alternative payment methods (APM) – anything other than credit or debit cards – have exploded in popularity to meet untapped demand.
Compared to Latin America and India, Africa has the largest share of APMs in digital commerce, accounting for 69% of the total value, compared to card payments at 31%. Mobile money has a 5% share in Africa’s top five economies, but with significant use in countries such as Kenya, where its penetration is almost universal, particularly in the integration of instant payments.
While Cash payment remains the preferred payment method in Africa’s digital commerce with 30% penetration compared to 9% in Latin America and 11% in India, APMs are poised to take further market share in the coming years.
What they say
Commenting on the data from Beyond Borders, Wiza JalakasiDirector of Market Development Africa at EBANX, said, “The future of payments in emerging markets is imminent. Payments in emerging markets like Africa are mobile-first and increasingly card-free. It is these alternative payment methods that are driving not only financial inclusion but also digital commerce from Latin America to Africa and India.”
Zoom Out: B2B Payments
One an estimated 70% of global B2B transactions they remain manual and do not have seamless flows. This presents a huge opportunity, especially in emerging markets such as Africa, Latin America and Asia, where B2B digital payments are growing faster than the global rate of 11% per year. In these regions, they are growing at an annual rate of 14% until 2027.
By this year, these areas are expected to account for 40% of the total value of B2B payments made online worldwide, according to Capgemini Research Institute.
B2B transactions are gaining ground in Africa. In Kenya, 42% of businesses shop online, according to the OECD and UNCTAD. These payments are also growing in part due to the proliferation of B2B marketplaces that have sprung up across the region and operate in countries such as Egypt, Morocco, Nigeria, Rwanda, Tanzania, and Ugandaas a strategic solution to reduce logistics costs and eliminate middlemen.
According to a GSMA report, these markets “can handle bulk payments and deliveries, reducing effort and cost; carding [aka customer attrition] on B2B platforms is also much lower than B2C e-commerce, at around 40% versus 80%, meaning that B2B platforms are much better able to retain their sellers.”
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