Africa’s payment outlook 2024

Johannesburg - Africa's financial landscape is on the cusp of dynamic transformation, particularly in countries such as Nigeria, South Africa, and Kenya. 

The adoption of digital payments continues to accelerate Africa's growth as the continent's domestic e-payments market is expected to see revenues grow by approximately 20% per year, reaching around $40 billion by 2025. 

Ola Oyetayo, CEO of Verto, says the shifts in the payment industry are expected to usher in a wave of innovative fintech products, trigger the formulation of new regulatory frameworks, and bring about significant implications for the broader financial sector.

"While there is optimism regarding the economic outlook of these nations in 2024, the key to success lies in effectively navigating and overcoming domestic infrastructural challenges. This necessitates a strategic shift towards the swift implementation of reforms, policies and projects." 

Painting the picture of the African landscape

The South African economy continues to experience a confluence of contrasting economic indicators. A peak followed by a subsequent downward trend influenced inflation and interest rates, with experts predicting that these rates would decrease further. 

While this has provided prospects of a more stabilised economic environment, several challenges such as rolling power cuts and logistical bottlenecks at ports emerged as significant impediments, weighing heavily on the nation's economic output. These obstacles have continued to impact progress, and have set the tone for a potentially challenging economic terrain in 2024.

"In Nigeria, the aftermath of the 2023 economic policy shifts promises significant transformations. From the impact of currency design policies to the rise of Buy Now, Pay Later (BNPL) apps and the evolving dynamics of the lifted crypto ban, the fintech and payment sectors are set for a reshaping that will reverberate throughout the nation," adds Oyetayo. 

Despite initial GDP projections, Kenya faces challenges in 2024 due to unpredictable weather affecting the agricultural sector.

South African Reserve Bank (SARB) launches a low-value real-time digital payment service

Despite 80% of South Africans having bank accounts, a considerable portion of consumer transactions still rely on cash. 

In light of this, the SARB has initiated a significant step in modernising the country's financial landscape by introducing PayShap, a low-value real-time digital payment service. 

"This innovative platform aligns with the South African Reserve Bank's Vision 2025, signalling a commitment to reform and modernise the national payment system framework," adds Oyetayo.

Cashless Payments Gain Momentum in Nigeria

In 2023, Nigeria witnessed significant strides in its journey towards a cashless economy, with a 55% surge in electronic transactions in January. This momentum was driven by the impact of the Central Bank of Nigeria's Naira redesign policy, which temporarily reduced the availability of cash. The shift accelerated the adoption of alternative payment methods like POS payments, USSD channels, bank transfers and Internet banking. 

Despite the return of cash to circulation, the residual effect of the policy expedited Nigeria's transition to digital payments, aligning with citizens' evolving preferences. 

More regulation in crypto as government eyes tax revenue

Kenya has emerged as a key player in Africa's cryptocurrency landscape, ranking third in Bitcoin asset trading, holding the third-largest web traffic to crypto sites, and positioned 21st globally in crypto adoption. 

Recognising the importance of this effort, Kenya's parliament has entrusted the Blockchain Association of Kenya (BAK) with preparing the Virtual Asset Service Provider's Bill, commonly known as the Crypto Bill. This legislative development signals a crucial move towards establishing a well-defined and inclusive regulatory environment for Kenya's growing cryptocurrency sector.

"Africa is positioned at the forefront of financial evolution, marked by distinctive changes across sectors driven by technological advancements, regulatory initiatives, and economic shifts. The financial future of the continent in 2024 reflects resilience in the face of challenges, adaptability to emerging trends, and a well-placed stance for continued economic growth," concludes Oyetayo.