According to a recent report from Mastercard, the domestic e-payments market in Africa is anticipated to expand by 20% annually and reach $40 billion by 2025.
In Africa, Kenya, Nigeria, and South Africa are among the nations leading the transition to digital payments, according to a report titled “The Future of Fintech: Rapid Growth Attracts Smart Capital.” These nations have infrastructure and regulatory frameworks that are already in place or are developing quickly and that support the growth.
“Widespread use of broadband and smartphone penetration fills the infrastructure gap to enable digital fintech services in Africa,” the report stated.
It went on to say that although cash still reigns supreme, emerging e-payment systems offered by banks and non-bank businesses are expected to gain ground.
According to them, the ecosystem thrives inside a supportive fintech infrastructure, e-commerce penetration, mobile money penetration, and regulation, among other variables.
The report also showed that 61 percent of the $2.7 billion raised in Africa in 2021 and 27 percent of the record-breaking number of deals closed were both attributable to the fintech industry.
According to Ngozi Megwa, senior vice president of digital partners and enablers at Mastercard for Eastern Europe, the Middle East, and Africa, fintech companies have grown in importance for consumers.
“They are channels for innovation and growth, as well as partners for co-creation. They come in different shapes and forms. Some fintech companies engage in issuing and acquiring activity and are, therefore, our direct customers,” Megwa further said.
She continued by saying that others serve as catalysts for their clients’ innovation and digitization, frequently specialized in segments or flows that are not yet catered to. They provide us with the chance to investigate novel use cases and preview innovation.
The Mastercard analysis made clear that cellphones are the most crucial device for Africa’s adoption of fintech.
The majority of the almost 400 million additional mobile users anticipated globally by 2025 would originate from emerging regions like Africa.
By 2025, smartphone adoption is expected to reach 75% thanks to initiatives to break down the affordability barrier.
According to the report, MSMEs have played a key role in the expansion of the fintech industry on the demand side. It states that in order to scale, source, and reach, MSMEs leverage finance and e-commerce technologies. According to the article, the development of alternative payment systems and new platforms is influencing the commercial environment.
It reads:
“Buoyed by demand, fintech has seen products based on multi-faceted innovation in emerging and mature economies. Providing scalable financial services using the internet, blockchain, and algorithms, fintech companies have widened the reach of financial services traditionally offered by banks, including loans, payments, investments, or wealth management.”
