Africa’s domestic e-payments market is projected to see a 20 percent revenue growth per year, reaching around $40 billion by 2025, according to a new report by Mastercard.
The report titled, ‘The Future of Fintech: Rapid Growth Attracts Smart Capital’, showed that within Africa, Kenya, Nigeria, and South Africa are among the countries leading the transition to digital payments, with existing or rapidly developing infrastructure and policy frameworks that enable the growth.
“Widespread use of broadband and smartphone penetration fills the infrastructure gap to enable digital fintech services in Africa,” the report stated.
It further stated that while cash dominates, newer e-payment solutions by banks and non-bank companies are likely to grow.
“Within an enabling fintech infrastructure, e-commerce penetration, mobile-money penetration, and regulation, among other factors, the ecosystem thrives.”
The report also revealed that the fintech sector accounted for 27 percent of the record-high number of deals closed and 61 percent of the $2.7billion that was raised in Africa in 2021.
Ngozi Megwa, senior vice president, digital partners and enablers, Eastern Europe, Middle East, and Africa at Mastercard said fintech companies have become an increasingly important segment for people.
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“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 also added that others are enablers that help their customers digitize and innovate, often specializing in segments or flows that are not yet serviced. “They preview innovation and offer us the opportunity to explore new use cases.”
The Mastercard report highlighted that smartphones are the most important tool for fintech adoption in Africa.
Of the nearly 400 million new mobile subscribers expected to sign up globally by 2025, the majority will come from frontier markets like Africa.
With efforts to remove the affordability barrier, smartphone adoption is likely to grow to 75 percent by 2025.
On the demand side, the report noted the role Micro, Small and Medium Enterprises (MSMEs) has been crucial to fintech’s growth. According to it, MSMEs use fintech and e-commerce solutions to scale, source, and reach. It stated that the growth in alternative payment rails and emerging platforms are shaping the commercial landscape.
It said, “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.”
