Business a.m
Africa is emerging as a significant player in the global digital commerce landscape, with a projected 10 million new consumers joining the online market in 2024. This growth is second only to Asia, and it is expected to be driven by the continent’s rising smartphone and internet penetration rates, as well as the growing use of digital payment solutions.
EBANX, a leading payment partner for global companies in rising markets, made the projection in its latest Beyond Borders report, made available to Business a.m.
The report highlights how the emergence of new consumer classes in Africa, Asia, and Latin America is transforming consumption trends worldwide. These regions are set to account for 70 per cent of the 109 million people entering the consumer class in 2024. This growing consumer base is expected to have a significant impact on the development of digital commerce, payment, and B2B ecosystems.
While developed countries are seeing a 13 per cent annual growth in digital commerce, Africa is experiencing a significantly faster growth rate of 25 per cent. According to Payments and Commerce Market Intelligence (PCMI), this growth is being driven by a number of factors, including the increasing availability of mobile technology, the emergence of a digital-savvy generation, and the growth of informal retail networks.
In a truly transformative development, by 2026 Africa’s digital commerce market is projected to reach a total value of $72 billion, with the top markets for digital commerce being Egypt, Kenya, Morocco, Nigeria, and South Africa. In the longer term, it is anticipated that Africa will contribute a greater share of consumer spending to the global economy than Europe, representing a significant shift in global economic power.
The increasing digitisation of African markets is revolutionising the region’s economies, with internet penetration forecasted to reach as high as 95 per cent in certain areas by 2028. However, while internet access is growing, only 44 per cent of adults currently make online purchases, showing a tremendous untapped potential for the development of e-commerce and digital financial services. In Africa’s leading digital economies, online retail is considered the most prominent type of digital commerce, accounting for as much as 58 per cent of total digital commerce in countries like Egypt, Kenya, Morocco, Nigeria, and South Africa.
According to the EBANX report,Africa has become a global leader in the use of alternative payment methods (APMs) such as mobile wallets, bank transfers, and cash payments, which now account for about 69 per cent of all digital commerce in key markets, while card payments make up the remaining 31 per cent. This is attributed to the limited access to traditional financial services and banking infrastructure, which has led to the development of innovative payment solutions tailored to the region’s needs. With the increasing use of mobile devices, Africa is also seeing a shift towards ‘mobile-first’ payments, where mobile phones are used to access financial services and make digital payments.
While cash still remains the dominant payment method in Africa’s digital commerce, APMs are poised for growth as the demand for financial inclusion and digital commerce expands. Wiza Jalakasi, director of Africa market development at EBANX, noted that alternative payment methods are playing a crucial role in enabling financial inclusion and driving digital commerce in emerging markets, such as Africa, Latin America, and India.
The EBANX report also pointed out that the surge in digital marketplaces has fueled an increase in B2B payments, particularly in emerging markets. It noted that around 70 per cent of worldwide B2B transactions are still manual and do not have a seamless flow. However, this presents a tremendous opportunity for fintechs and other digital payments providers in countries like Africa, Latin America, and Asia, where there is a large untapped market for B2B payments.
