According to a digital payments and commerce report by EBANX, a global fintech company that connects local payment methods from Africa, Latin America, and India to global digital commerce, Africa has emerged as a frontier for the new online consumer class, representing 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% per year in developed countries, online sales are expanding more rapidly in Africa at a pace of 25%, according to Payments and Commerce Market Intelligence (PCMI).
By 2026, the digital commerce market is expected to reach US$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 lack access to traditional financial services, alternative payment methods (APMs) – 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 which stand at 31%. Mobile money holds a 5% share in Africa’s five top economies but with significant usage in countries like Kenya, where its penetration is almost universal, particularly in integrating instant payments.
While cash payment remains the preferred payment method in Africa’s digital commerce with a 30% penetration compared to 9% in Latin America and 11% in India, APMs are poised to take further market share in the coming years.
In Kenya, 42% of businesses make online purchases, according to OECD and UNCTAD. These payments are also partly on the rise due to the proliferation of B2B marketplaces that have emerged across the region…
What They’re Saying
Commenting on the data from Beyond Borders, Wiza Jalakasi, Director of Africa Market Development at EBANX, said, “The future of payments in rising markets is instant. Payments in emerging markets like Africa are mobile-first and increasingly not card-based. It’s these alternative payment methods that are driving not only financial inclusion but digital commerce from Latin America to Africa to India.”
Zoom Out: B2B Payments
An estimated 70% of worldwide B2B transactions remain manual and lack seamless flows. This constitutes a massive opportunity, especially in rising markets like Africa, Latin America, and Asia, where B2B digital payments are growing faster than the global rate of 11% annually. In these regions, they are developing at a 14% annual rate through 2027.
By this year, these regions are expected to constitute 40% of the total value of B2B payments made online worldwide, per Capgemini Research Institute.
B2B transactions are gaining traction in Africa. In Kenya, 42% of businesses make online purchases, according to OECD and UNCTAD. These payments are also partly on the rise due to the proliferation of B2B marketplaces that have emerged across the region, operating in countries like Egypt, Morocco, Nigeria, Rwanda, Tanzania, and Uganda, as a strategic solution to reduce logistical costs and eliminate intermediaries.
According to a report from GSMA, these marketplaces “can undertake bulk payments and deliveries, reducing effort and cost; churn [aka customer attrition] on B2B platforms is also much lower than B2C e-commerce, at approximately 40% versus 80%, which means B2B platforms are much better able to retain their sellers.”
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