Before writing this article, I tried to estimate the size of payments market in Tanzania, I ended up with a figure that is between $70 Billion and $120 Billion which includes remittances, mobile money and bank payments. So I went like, look, what is the size of Africa payments as a whole, that would be more interesting.
Africa is a collection of countries with small and big opportunities, According to World bank and GSMA, Africa leads the world in mobile money payments, Over the years we have heard Africa is big, Africa payments are growing fast, Since we know the global payments opportunity is about $200 trillions, So I took it upon myself to estimate the true size of Africa payments opportunity as of 2024.
To estimate the total value of this market, it’s crucial to break it into two parts, I called them consumer-led payments and business-led payments.
Below, we break down the numbers and factors shaping this market, providing a compelling picture of Africa’s payment ecosystem.
Consumer-Led Payments:
Leaving aside cash payments, This part includes the majority of mobile money payments, card payments and P2P payments, it covers bills, utility payments, consumer to government payments, consumer to business payments.
Consumer-led payments form the backbone of Africa’s payments ecosystem, driven by high mobile phone penetration, rapid urbanization, and the growing need for financial inclusion. This category includes remittances, card payments, and mobile money transactions, which have seen explosive growth in recent years.
1. Remittances
Africa remains one of the largest remittance-receiving regions in the world. According to the World Bank, remittances to Africa were estimated at $96 billion in 2023, with Sub-Saharan Africa accounting for $56 billion of this total. These inflows are crucial for supporting millions of households and fueling local consumption.
Remittance Volume: $96 billion (2023), Growth: Remittances are projected to grow steadily at around 3-4% per year, driven by the large African diaspora, especially in Europe, North America, and the Middle East. This growth doesn’t include the massive figure in the informal remittances volumes which is easily another $50 Billion.
Africa remittances space is dominated by senders like MoneyGram, Worldremit and RIA while hubs like Onafriq, Terrapay and Thunes dominate in connecting the senders with mobile money operators like Mpesa and Airtel Money.
2. Mobile Money Transactions
Africa leads the world in mobile money adoption, In 2023, mobile money transactions in Sub-Saharan Africa reached $912 billion, according to GSMA. Mobile money is not just a tool for remittances or person-to-person (P2P) payments; it is widely used for merchant payments, bill payments, and even government services.
Mobile Money Volume: $912 billion (2023), Projected Growth: With a 20% annual growth rate, mobile money could reach over $1.1 trillion by 2025.
This segment is dominated by the big 4 , the bigtelcos which are so dominant in Africa payments, It includes Orange, Vodacom (mpesa), Airtel and MTN(momo)
3. Card Payments
The leading cards in Africa are Visa, Mastercard and Verve, Despite the dominance of mobile money, card payments (debit and credit cards) are growing, particularly in urban areas and for e-commerce. According to Statista, card payments in Africa exceeded $150 billion in 2023, driven by the rise of digital retail and e-commerce.
Card Payment Volume: $150 billion (2023), This segment is expected to grow by 15% annually due to the expansion of digital platforms and increasing card penetration.
Total Consumer-Led Payments.
Adding remittances, mobile money, and card payments together gives us a substantial total for consumer-led payments of Total Volume: $1.2 trillion
Business-Led Payments:
This segment of the market covers domestic and cross-border business to business payments, business to consumer and business to government payments.
Even though Africa is import reliant, Africa’s domestic payments market far exceeds its cross-border flows due to the depth and activities in local economies.
Business-to-business (B2B) payments form a critical part of Africa’s economy. While cross-border trade is growing, domestic B2B payments far outpace cross-border payments due to the high volume of local business activities in sectors like agriculture, retail, services, and manufacturing.
1. Domestic B2B Payments
Africa’s domestic B2B payment landscape is fueled by a large informal sector and a growing number of small and medium enterprises (SMEs). According to McKinsey, the total value of domestic B2B payments in Africa is estimated to exceed $1 trillion annually. This includes payments for goods and services exchanged between businesses within African countries, covering everything from agricultural supply chains to retail distribution networks.
Domestic B2B Payments Volume: $1 trillion, As formalization and digitization increases, domestic B2B payments are to grow at around 10% annually.
Truly cash is king, and to see the throne you should go to Africa, Mainly cash is used for majority B2B payments, bank transfers are second and mobile money is not used for B2B payments due to limitations of how mobile money works.
2. Cross-Border B2B Payments
Africa’s import dependency means cross-border payments are essential, especially for industries such as manufacturing, energy, and technology. However, still constrained by infrastructure challenges and regulatory barriers. Pundits estimated cross-border B2B payments to be at around $300 – $500 billion, but this figure is expected to grow following implementation of cross country initiatives like AfCFTA and PAPPS.
Cross-border payments are projected to grow by 20-25% per year, driven by intra-African trade, which could increase B2B cross-border flows to $600 billion by 2030.
In business cross border payments we see no winners, although the banks are slow and expensive, still they take the lion’s share of business cross border payments, Tens of fintechs in the space including VertoFx and Aza Finance are trying to innovate and capture more volumes which may otherwise go via informal routes.
Total Business-Led Payments.
Calibrating my estimations, Combining domestic and cross-border B2B payments, the total business-led payment volume is: Total Volume $1.5 trillion (2024)
The Total African Payments Market
By integrating consumer-led and business-led payments, we estimate the total size of the African payments market as follows:
- Consumer-Led Payments: $1.2 trillion
- Business-Led Payments: $1.5 trillion
- Total Payments Market: $2.7 trillion
Conclusion:
Africa’s payments market, valued at over $2.7 trillion, is a dynamic and rapidly growing space. Consumer-led payments dominate, with mobile money leading the charge, while B2B payments are vital to the continent’s economic backbone. Cross-border payments, though currently smaller than domestic payments, are poised for massive growth, especially with the expansion of intra-African trade under AfCFTA.
As Africa continues to digitize and formalize its economy, the payments market could easily surpass $3 trillion within the next few years. The combination of technological innovation, growing financial inclusion, and increasing cross-border trade will unlock even greater opportunities in this vibrant market.
In the consumer-led payments segment, mobile money and remittances are expected to continue dominated by established players for the foreseeable future. Companies like WesternUnion, MTN, M-Pesa, Onafriq, TerraPay and WorldRemit, simply because they have a stronghold on the African market due to their massive infrastructure, regulatory moats built over time and customer loyalty gained.
However, the business-led payments space, both domestic B2B and cross-border B2B, is where we are likely to see new winners. With the increasing digitalization of business processes and the rise of Africa’s intra-trade, new payment players and API providers will make it possible for many fintechs to do more in the space underserved by banks and mobile money giants.
This article first appeared on CoFounders Notebook
Featured image credit: edited from freepik
