New Telegraph

Digital Commerce: Nigeria, Other Markets to Hit $72BN by 2026

A new report by EBANX has revealed that digital commerce in Nigeria and four other African countries will hit $72 billion in the next two years. According to the new annual Beyond Borders digital payments and commerce re- port by EBANX, a global fin- tech company that connects local payment methods from Africa, Latin America, and India to global digital commerce, Africa has emerged as a frontier for the new online consumer class, representing an estimated 10 million new consumers in 2024 and trailing only Asia as a region.

The report said rising markets in Africa, Asia, and Latin America were driving future consumption and represent 70 per cent of the 109 million people worldwide who are entering the consumer class this year, per the World Data Lab. It pointed out that by 2026, the digital commerce market is “expected to reach $72 billion in total value in its top five markets: Egypt, Kenya, Morocco, Nigeria, and South Africa. Over the next decade, Africa will add more to consumer spending than Europe.” This increasingly new face of the global consumer will have major implications for the growth of digital commerce, payments, and the dominance of B2B payments. While digital commerce is growing by 13 per cent per year in developed countries, online sales are expanding more rapidly in Africa at a pace of 25 per cent, according to Payments and Commerce Market Intelligence (PCMI). Digitisation is reshaping African markets with access to the internet projected to become nearly universal in some regions by 2028.

The most dramatic rise is anticipated in Egypt, where internet penetration is expected to more than double, reaching 98 per ccent. However, only 44 per cent of African adults make online pur- chases, per Insider Intelligence and PCMI data, presenting a huge untapped potential for growth. Online retail dominates Africa’s digital commerce landscape, ac- counting for 58 per cent of the digital volume in 2023 across key countries such as Egypt, Kenya, Morocco, Nigeria, and South Africa. As the vast majority of Africans lack access to traditional financial services, alternative payment methods (APMs) – anything other than credit or debit cards – have exploded in popularity to meet untapped demand. Compared to Latin America and India, Africa has the largest share of APMs in digital commerce, ac- counting for 69% of the total value, compared to card payments which stand at 31 per cent.

Mobile money holds a five per cent share in Africa’s five top economies but with significant usage in countries like Kenya, where its penetration is almost universal, particularly in integrating instant payments. While cash payment remains the preferred payment method in Africa’s digital commerce with a 30 per cent penetration compared to nine per cent in Latin America and 11 per cent in India, APMs are poised to take further market share in the coming years. Commenting on the data from Beyond Borders, Wiza Jalakasi, Director of Africa Market Development at EBANX, said; “The future of payments in rising markets is instant.

Payments in emerging markets like Africa are mobile-first and increasingly not card-based. It’s these alternative payment methods that are driving not only financial inclusion but digital commerce from Latin America to Africa to India.” An estimated 70 per cent of worldwide B2B transactions remain manual and lack seamless flows. This constitutes a massive opportunity, especially in rising markets like Africa, Latin America, and Asia, where B2B digital payments are growing faster than the global rate of 11 per cent annually. In these regions, they are developing at a 14 per cent annual rate through 2027. By this year, these regions are expected to constitute 40 per cent of the total value of B2B payments made online world- wide, per Capgemini Research Institute.

B2B transactions are gain- ing traction in Africa. In Kenya, 42 per cent of businesses make online purchases, according to OECD and UNCTAD. These payments are also partly on the rise due to the proliferation of B2B market- places which have emerged across the region, operating in countries like Egypt, Morocco, Nigeria, Rwanda, Tanzania, and Uganda, as a strategic solution to reduce logistical costs and eliminate intermediaries. According to a report from GSMA, these marketplaces “can undertake bulk payments and deliveries, reducing effort and cost; churn [aka customer attrition] on B2B platforms is also much lower than B2C e-commerce, at approximately 40 per cent versus 80 per cent, which means B2B platforms are much better able to retain their sellers.”

Read Previous

All-Share Index Rebounds, Gains 0.30%

Read Next

NGX RegCo, ICAN Collaborate To Boost Stakeholders’ Knowledge