It’s been a tumultuous and volatile year for businesses around the world.
And while the uncertainty is expected to continue into 2023, Karen Nadasen, CEO at PayU South Africa, told PYMNTS’ Karen Webster that African markets have been spared the serious macroeconomic impacts felt by others around the world.
If anything, these markets seem to be receiving increased attention from investors who have tightened the purse strings when it comes to more mature, developed markets.
“Investors are looking at markets that are on the up, and that [is mainly] Africa. [The region is also] one of the [few] areas that has had an increase in VC as opposed to other markets, which have all seen a decline [in investment],” Nadasen told PYMNTS’ Karen Webster in an interview.
Beyond investments, eCommerce has grown significantly across the region, increasing by 400% in South Africa alone since the onset of the pandemic.
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To make the most of this accelerated growth, Nadasen said the time is ripe to make “necessary” changes in the market to boost financial inclusion across the region, where millions remain un- and underbanked today.
She pointed to initiatives such as the African Continental Free Trade Area (AfCFTA) — which entered into force in May 2019 and aims to strengthen the region’s trading position on the global market — as key to boosting intra-Africa trade and by extension bring more people into the financial fold.
And despite its ambitious nature and the hurdles to overcome, she said the new AfCFTA market, considered the second-largest free-trade area by number of member states after the World Trade Organization, would also expedite eCommerce growth, similar to what the formation of the Eurozone has done for European markets.
“There is a lot of groundwork [required] from a digitization, data and education perspective. [But while the road ahead] is a tough one, there are indicators to show that it could succeed,” Nadasen noted.
Adopting a Collaborative Approach
On a continent with 54 countries and over 2,000 natively spoken languages, it’s no surprise that regional payment options run into several hundreds. And while that means businesses and consumers are spoiled for choice, it remains a difficult undertaking for merchants looking to create the right mix of solutions to meet customers’ needs and preferences.
PayU’s global platform, for example, aggregates around 400 payment methods including credit and debit cards that Nadasen said are used by a large part of the population in South Africa — a market with the highest card penetration rate among its African peers, at about 80%.
Overall, she said aggregating the myriad of payment methods boils down to “analyzing the demographic, their place in the market [as well as] FinTechs [and] what they have to offer … so that an online merchant is able to grow their business and have a wide range of consumers.”
To further accelerate financial inclusion, Nadasen pointed to ongoing regional projects such as Smart Africa — it aligns closely with the AfCFTA — which is looking to address the digital identity challenge across the region.
The end goal, she said, is to “give people a digital identification that can then help to empower them,” after which companies like PayU can come in to build on that progress and provide financial services to unbanked and underbanked populations.
Ultimately, she said it will require a collaborative approach between banks, FinTechs, regulators and the wide range of national payment stakeholders to deepen financial inclusion and bring more people into the financial fold.
“We really can make a material difference in relation to financial inclusion and drive that if we collaborate and work together,” Nadasen said.
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