Explore the African digital commerce market using innovative payments solutions
Doubtless, Africa is enjoying extraordinary growth in digital commerce. Its younger population, dramatic economic expansion and breakthroughs in technology have made the area an exciting prospect for those wishing to expand into new territories. Furthermore, improved payment systems are helping all the above to work in synergy and revolutionise the future of African-led transactions, paving the way for simpler, speedier and seamless digital commerce payments.
The Younger Generation is Laying the Groundwork for a Thriving African Economy
Young Africans living in urban cities have created a goldmine for economic expansion, especially since the continent boasts the highest population growth rate globally, and a median age of just 20 years! Future projections show that by 2045, most Africans will live in metropolitan areas. In fact, this younger demographic has created tremendous potential for digital payments to thrive, with people already seeking out e-hailing taxi services to get around, streaming sources for entertainment purposes and online shopping via multiple e-commerce platforms. Covid-19 has also played an important role, as the lockdowns pushed many Africans into seeking out online, mobile-based alternatives.
There’s so much opportunity in the African market, and yet it remains relatively untapped. It’s time to take advantage of these remarkable opportunities, if you haven’t done so already.
Governments in Africa are Pushing to Expand Internet and Mobile Phone Access
Nowadays, there’s lower costs attached to internet and mobile phone access in Africa. This is good news, especially in Sub-Saharan Africa where governments are pushing to expand internet and mobile phone access due to these cost reductions. Statistics show that by 2021, 46% of the population subscribed to mobile services and today, there are approximately 515 million people currently connected. If projections hold true, 100 million additional subscribers will join-up by 2025, bringing the total number of users to a notable 613 million, thus presenting extraordinary opportunities for those looking to enter the African digital commerce market.
- By 2021, 46% of the African population subscribed to mobile services.
- Today, in 2023, there are 515 million African residents connected.
- By 2025, the forecast is another 100 million additional subscribers.
- The total in 2025 is predicted to be huge, with 613 million Africans using digital commerce.
Digital Adoption Directly Correlates to Improvements in Infrastructure
Investment in African infrastructure is helping to accelerate e-payments, both domestically and across borders. Domestic payments within Africa have been revolutionised by the emergence of real-time infrastructure, allowing for instant money transfers between accounts. This McKinsey reportpredicts that between 2020 and 2025, the e-payments market will grow by approximately 150% – with the forecast of reaching almost $40 billion in revenue just from domestic payments.
The Nigerian Payments’ Market
Nigeria has recently been ranked sixth among the world’s most advanced real-time payments’ markets, according to a report by ACI Worldwide. This puts them just behind countries like South Korea, Brazil, Thailand, China and India – with limitless potential for economic growth.
Kenya, Egypt, Tanzania and Ghana are Gaining Traction Too!
Meanwhile, the projections for Kenya are very positive, with the adoption of real-time payments expected to grow from 7.7% in 2021 to an impressive 46.6% in 2026, at a CAGR of 47.7% between 2021 and 2026. Nations such as Egypt, Tanzania, and Ghana are taking proactive steps to enable fast payments following the passing of new regulations.
South Africa Surprisingly Lags Behind in Digital Payments’ Adoption
In contrast, South Africa’s adoption of digital payments has been relatively sluggish compared to other countries as a result of their more established, traditional banking systems. Additionally, there are some Central African nations that are lagging behind in payment digitisation such as Cameroon, where insufficient regulations and infrastructure along with minimal public awareness surrounding digital financial services have slowed progress.
Alternative Payment Methods are No Longer an Option
Cash may still be king, but it looks like its reign is set to end soon. In fact, the World Bank estimated that by the end of 2021 nearly half of all online transactions in Africa would be made through digital payment methods such as e-wallets, mobile money and instant transfers, meaning that digital commerce in the region should enjoy extraordinary leaps forward.
Certain African countries—Egypt, Nigeria, Kenya, Ghana, and South Africa in particular—have led this transition to digital payments, far faster than other regions. These African countries have invested heavily in setting up the necessary infrastructure for digital payments’ processes. For businesses aiming to expand both domestically and internationally, solutions that support multiple payment methods such as cards, bank transfers and mobile money are a key component for success.
We are told through research by McKinsey that digital wallets will be the fastest payment method in Africa, expecting to expand by as much as 25% annually by 2025 (this includes online and offline transactions). Cards should grow by 20% every year and Crypto, CBDCs (Central Bank Digital Currencies) are also regarded as strong potential for the future of payments.
Explore Remarkable Opportunities in Africa Simplifying Digital Payments in a Complex Market
Overall, the expansion of digital payments across Africa shows no signs of slowing down. With a booming population and increased access to mobile and internet services, the continent is on track to become an economic powerhouse in the years to come.
As this piece has established, the African market is both complex and varied, with over 50 countries, 41 distinct currencies, and a fluctuating acceptance of digitisation across the region. Companies looking to launch into the continent need comprehensive solutions such as dLocal, that make it possible for them to accept customer payment methods, as well as a team of local experts who can provide immediate onsite assistance. With these types of solutions and local experts, businesses, financial institutions, and consumers alike will benefit from further improved and more efficient payments infrastructure – with endless opportunities and plenty of potential for even greater innovation.