This fintech vertical has seen exponential growth over the last couple of years as the pandemic led to an e-commerce boom. BNPL spending went up 230% in the United States alone since 2020, according to Accenture and is estimated to total $226 billion in 2021, according to a Juniper Research report. Apple recently joined the BNPL craze with Apple Pay Later.
The craze has since gotten to Africa to great reception, especially in sub-Saharan Africa, with one of the fastest-growing consumer markets in the world. Companies like Carbon with Carbon Zero, CDCare, EasyBuy, AltMall, and CredPal are following this latest trend in global consumer financing and looking to tap into the boom.
The prospect is mouth-watering, with the BNPL payments expected to grow in Africa. In Nigeria, a report by Research and Markets estimated an expected increase of 59.3% to reach $325.4m in 2021.
It’s becoming a widely used option for Africa’s young demographic (25-40). This group often has a stable income or salary, and verifiable Know-Your-Customer information- in Nigeria, NIN/BVN is essential.
The lack of credit and high-interest rates and charges with formal banking institutions have made Africa market-ready for BNPL.
In Africa, where emerging economies often crack under pressure, leading to harsh economic conditions, the purchasing power of the populace reduces. This will drive more adoption of BNPL fintechs as people find better financing options to purchase goods.
The BNPL payment model is also perfect for Africa, with frequent inflationary surges. Buyers can lock in at a price and make purchases while paying over time. Without BNPL, the other option is to save before making a purchase. Still, with the high inflation rate in Africa, the product might cost a significant percentage higher when a consumer has saved enough to buy.