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Africa’s domestic e-payments market could rake in US$40bn by 2025

By , ITWeb
Africa , 09 Sep 2022

South Africa is likely to represent a smaller share overall while remaining the biggest e-payments market in Africa in 2025, with US$5-billion in annual revenues.

While cash is still king in Africa, the continent’s e-payments market is likely to grow by more than US$40-billion in revenues from domestic payments alone between 2020 and 2025, with about 188 billion in transaction volumes.

This is according to a new report, The Future of Payments in Africa, released by McKinsey, which details how demand from consumers and businesses, innovations, entrepreneurs, regulators, and capital are reshaping Africa’s fast-growing electronic-payments landscape.

It also highlights the challenges and possibilities for traditional and non-traditional players looking to find their niche in this rapidly evolving and increasingly competitive landscape.

McKinsey research shows that in 2020, e-payments generated approximately US$24-billion in revenues, of which about US$15-billion was domestic electronic payments from 47 billion individual transactions totalling just over US$800-billion of transaction values.

However, on average, only 5 to 7% of all payment transactions in Africa were made via electronic or digital channels.

According to Edem Seshie, an Associate Partner in McKinsey’s Lagos office, e-payments constitute a significant growth opportunity on the continent, especially as the convenience and scalability of payment methods improve and support infrastructure develops.

“Enduring pain points coupled with shifts in consumer and business behaviour, as well as supportive government and regulatory environments, are opening up unprecedented opportunities for the acceleration of e-payments in Africa. Local, global, traditional, and new players are all innovating to capture the $40 billion of revenue potentially at stake by 2025. This is an exciting, complex, and evolving market with tremendous growth prospects, and we can expect to continue seeing a new generation of winners emerge and scale,” says Seshie.

The report also highlights that around half of future electronic-payments revenue will likely come from Egypt, Ghana, Kenya, Nigeria, and South Africa, with the fastest growth in Nigeria, at 35% per year.

Other countries that could see electronic-payments growth above 20% per year include Ghana, Ivory Coast, Kenya, Senegal, and Uganda.

South Africa is likely to represent a smaller share overall while remaining the biggest e-payments market in Africa in 2025, with US$5-billion in annual revenues.

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