the keys to the growth of electronic payment – ​​Jeune Afrique

In a recent study, the consulting firm McKinsey analyzes the factors that contribute to the dematerialization of payments in Africa. Recent developments in the sector (cryptocurrencies, mobile money, online payment) are flooding the market with innovations and popularizing electronic transactions.

Although the use of cash is still largely dominant in Africa, revenues from the electronic payment market are expected, on average, to increase by 20% per year, reaching $40 billion in 2025, according to the report. In 2020, the e-payment industry already represented 24 billion dollars in turnover, with transactions via mobile money reaching of the records.

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Nevertheless, this growth will be unequally distributed with regulations, infrastructures and an e-commerce penetration rate that differ according to the country. “It is likely that around half of e-payment revenue” will come from Egypt, Ghana, Kenya, Nigeria and South Africa, according to the study. A share that will decrease, with the progressive opening of the market to the whole continent.

Investment inflow

Flutterwave, Yellow Card, Opay, Wave… In recent years, fintech start-ups and various fast and inexpensive cross-border payment solutions have flocked to the market. As traditional banks and regulators lose ground, entrepreneurs are taking over the market. This is evidenced by the destination of the main investments: private funds are indeed fully committed to the digitization of transactions with, in 2021, more than 60% of venture capital investments of $200,000 and more, raised by fintechs and their disruptive solutions.

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Digital wallets (wallets), which make it possible to integrate several monetary currencies into a traditional bank account, as well as mobile money, are those that are becoming more and more part of the daily lives of Africans.

According to the association of telecom operators GSMA, 697.7 billion dollars were exchanged via mobile payment solutions in sub-Saharan Africa last year, a rise 40% compared to 2020. The region accounted for almost 70% of the total amount of transactions recorded during the past financial year, far ahead of South Asia (156.3 billion dollars).

The key role of regulators

Telecom operators are also identified as development levers for the e-payment sector: by monetizing their user databases, accelerating investment in innovation and creating cross-border fund transfer circuits.

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It should be noted that the study also highlights the place of regulators in the development of electronic payment. These being essential to improve financial inclusion, while taking measures to reduce the use of cash payment. For example, the Central Bank of West African States (BCEAO) announced last April the creation of a Fintech Knowledge and Monitoring Office, with the aim of promoting and monitoring initiatives in favor of financial innovations.

Similarly, the arrival of the Pan-African Payment and Settlement System (PAPSS), still under development within the framework of the African Continental Free Trade Area (Zlecaf), contains strong potential for cross-border – digital – payments. . This should ease the payment constraints of 50 countries, and in 40 currencies different.

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