COVID-19’s US$2.6-bn impact on e-transactions in Africa
The COVID-19 pandemic could cost African countries as much as US$2.6-billion in electronic transactions owing to shutdowns, border closures and reduced economic activity.
Despite an aggressive push by regional banks - including Ecobank, Standard Bank and Absa, to promote digital payment platforms, and the increase in adoption of electronic payments in several economies, the overall value of transactions is expected to be lower compared to that of 2019.
This is according to a report by McKinsey, co-authored by Francois Jurd de Girancourt and Frederick Twum, along with contribution from other partners.
“Electronic payments revenue in Africa could decline by 10 to 13 percent in 2020, relative to the 2019 baseline, with a potential revenue loss of between $1.8 billion and $2.6 billion,” reads an excerpt from the report.
It adds that the African electronics payments industry generated approximately US$19.3-billion in revenues in 2019, and approximately US$10-billion of this “was from domestic electronic payments” that exclude remittances and cross-border payments.
According to another report, released by emerging markets insights company Tellimer, the value of transactions in digital payments for Kenya declined by around 5% after implementation of lower charges for electronic and mobile payments.
“The daily average amount per transaction declined by 14%. Although transaction volumes grew by 10%, transaction value declined by 5%... this implies that users made more transactions, but of lower value,” the report stated.
Major platforms for electronic payments in most African countries include e-commerce, internet payments, mobile payments, ATMs, mobile applications and mobile money platforms such as Airtel Money, EcoCash and M-Pesa among others.