Africa’s e-payments landscape is changing fast, fueled by technology, growing mobile use, young populations, and shifting regulations. While cash is still king in many areas, digital payments are quickly catching up. By 2025, Africa’s domestic e-payments market is expected to hit $40 billion in revenue, with an annual growth rate of around 20%.
Key Drivers of Growth
- Mobile-Money Boom: Mobile money is taking off in Africa, especially in countries like Kenya, Nigeria, and Ghana. The COVID-19 pandemic accelerated this trend, with Nigeria seeing its mobile money transactions double in 2020, and South Africa experiencing a surge in online shopping during lockdowns.
- Tech and Infrastructure Advancements: African countries are adopting new payment technologies, building stronger infrastructure, and expanding mobile networks that support digital transactions. Egypt, Kenya, and South Africa are at the forefront, pushing for policies and systems that make digital economies more accessible.
- Young, Tech-Savvy Population: With over 60% of Africans under the age of 25, the demand for quick and easy payment methods is growing fast. This tech-savvy generation is helping to drive the shift to e-payments.
- E-commerce Expansion: As e-commerce grows, so does the need for dependable online payment systems. In South Africa, for instance, online shopping spiked during the pandemic, underscoring the increasing importance of digital payments.
Growth Potential and Challenges
The e-payments market in Africa is expected to grow by 150% between 2020 and 2025. Countries like Nigeria, Kenya, and Ghana are poised to see the most rapid growth, with Nigeria alone projected to have a 35% annual increase in e-payment revenues. South Africa will continue to lead but may represent a smaller share of the overall market as other nations catch up.
However, a few hurdles could slow this growth:
- Infrastructure Gaps: Many countries still struggle with weak internet and digital payment systems, which can hold back progress.
- Regulatory Issues: Some African markets face unclear or inconsistent regulations, slowing down e-payment adoption. While certain countries are pushing forward with innovation-friendly rules, others are lagging.
- Financial Inclusion: A large number of people, especially in rural areas, are unbanked or underbanked, creating barriers to scaling digital payments.
Opportunities for Growth
- Cross-Border Payments: Making cross-border transactions easier could unlock massive potential for growth. Fintechs and nonbank players are already working on new solutions to make payments across countries smoother.
- Crypto and Digital Currencies: Although still in its early days, the rise of digital currencies could shake up Africa’s payment landscape, offering alternatives to traditional money, especially in places where inflation or currency devaluation is a problem.
- Open Banking: Open banking, which allows developers to create apps and services around banks, presents new opportunities for financial inclusion and building digital ecosystems.
Africa’s e-payments market is set for significant growth, thanks to mobile adoption, expanding e-commerce, and better payment infrastructure. Though challenges remain, the continent is on track to become a global leader in digital payments innovation. By 2025, this market will offer exciting opportunities for both traditional banks and fintech companies, playing a vital role in Africa’s broader economic growth.
