A recent study conducted by the B2B payment platform Duplo sheds light on the digital payment landscape in African countries, including Nigeria, Kenya, Ghana, and South Africa.
While South Africa leads in electronic bank transfers and processing speed, Kenya dominates in payment automation and mobile money services.
The B2B segment in Africa has yet to fully embrace digital solutions compared to Consumer-to-Consumer (C2C) and Business-to-Customer (B2C) transactions.
Despite having a market share of $1.5 trillion, the B2B segment remains untapped. In comparison, the global B2B payment market share is worth $125 trillion, according to a World Bank report.
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Challenges Hinder Africa’s Digital B2B Market
Various challenges hinder Africa’s digital B2B market, including cybersecurity threats, limited infrastructure, poor internet connectivity, and unreliable systems. These issues affect transaction speed and hinder businesses’ growth potential.
However, Duplo’s report remains optimistic about the future, given the growing trend of digital transformation in the business sector.
As more companies adopt automated payment systems like electronic bank transfers and other innovations, these challenges are likely to diminish.
Duplo’s research involved surveying 1,218 representatives from 1,200 businesses across South Africa, Nigeria, Kenya, and Ghana.
Electronic bank transfers lead the way in Africa, with 39% of vendors preferring this method. The alternatives include debit/credit cards (10%), cash, mobile money (18%), cheques (18%), and others.
A steady shift toward digital payments
Although there is a steady shift towards digital payments, 14% of vendors still prefer cash transactions, with many companies in Ghana relying on cash payments due to its large informal market.
In terms of electronic bank transfers, South Africa has the highest adoption rate at 49.1%, closely followed by Nigeria at 48.5%. Ghana (34%) and Kenya (31%) occupy the third and fourth positions, respectively.
Regarding debit/credit card payments, South Africa leads with 21.7% adoption, credited to its relatively developed banking sector and widespread card services. In contrast, Ghana has the lowest card adoption rate at 4.7% for vendors.
Mobile money is more prevalent in Ghana (30.4%) and Kenya (27.2%) due to the success of Ghana’s MTN Mobile Money (MOMO) and Kenya’s M-Pesa. Nigeria (10.7%) and South Africa show lower penetration in this payment method.
While cheques still dominate in Kenya and Ghana compared to Nigeria and South Africa, the report predicts a decline in cheque usage as more B2B companies embrace technology.
Kenyans lead in payment automation, with 83% revealing the use of semi-automated or fully-automated systems.
South Africa has the shortest wait time for processing invoices at 39.93%, closely followed by Nigeria (39.74%) and Ghana (38.36%).
For cross-border payments, local banking partners and fintech platforms are preferred over offshore foreign accounts, Bureau De Change, and cash.
Conclusion
The study shows a gradual but steady transition towards digital payment solutions, with cash being the least used option.
Overall, the study highlights the evolving digital payment landscape in Africa’s B2B market, with promising opportunities for growth and increased adoption of technology-driven payment solutions.
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