The Buy-Now, Pay-Later (BNPL) market in Africa and the Middle East is projected to grow from $15.5 billion in 2024 to $33 billion by 2029, according to FT partners fintech industry research.
This is because several large mergers and acquisitions have recently occurred in the BNPL space, and foreign players are looking to expand further in Africa.
“The COVID-19 pandemic led to more consumers utilising digital payment methods in Africa, such as BNPL for in-store and online purchases,” the report said.
Buy-now, Pay-Later is a form of lending that effectively gives consumers access to credit at the point of sale. Instead of paying the full amount for a product all at once, consumers get the item and make installment payments.
In 2024, the report revealed that the total Gross Merchandise Value (GMV) processed through BNPL services reached $1.07 billion in South Africa, $1.08 billion in Kenya, $2.34 billion in Egypt, and $3.29 billion in Nigeria.
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It said, “Despite many African consumers lacking any form of identification and credit score history, a poor consumer credit culture, and regulatory uncertainty, the BNPL market in Africa is expected to grow significantly over the next 5-10 years.
“Innovative credit underwriting technology, lack of alternative financing options, rising costs, and access to more credit data are all factors driving the industry’s growth in Africa.”
A report by Rest of the World disclosed that M-Kopa, the East Africa–based BNPL service, expanded to Nigeria and sold over 20,000 smartphones during a pilot phase before its official launch in July 2021.
Between December 2021 and March 2022, at least four African startups—MarketForce, TradeDepot, Wasoko, and M-Kopa—collectively raised over $350 million, focusing on BNPL services for B2B businesses. At least two of these companies operate in Nigeria, it said.
In a country where just 3 percent of the 140 million adult population have access to bank credit, the A2F-2023 Enhancing Financial Inclusion Survey highlighted that borrowing is still predominantly sourced from friends, family, and informal financial services, as banks’ reluctance to engage in consumer lending.
The survey revealed that in 2023, borrowing from friends and family increased to 24 percent, up from 16 percent in 2020. Informal sources accounted for 8 percent, while borrowing from banks rose to 4 percent, compared to 2 percent reported in 2020.
However, 62 percent of the adult population is not borrowing, as the lack of a perceived need for credit and the desire to live within one’s means top the reasons for not borrowing, EFInA disclosed.
As a result, BNPL is becoming a rising alternative and is set for further growth as Nigerians embrace digital credit. However, many remain skeptical about the market’s prospects, particularly about loan recovery.