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Aida Diarra, Senior Vice President and Group Country Manager for SSA at Visa

October 2022


6 - 7 Minutes

Destination Digital: Spotlight on Sub-Saharan Africa’s Prospects

Innovations in digital payments are driving the Sub-Saharan Africa (SSA) region’s prospects for economic growth. Here, Aida Diarra, Senior Vice President and Head for SSA at Visa, shares insights into the main trends, from acceptance to ecommerce, fintech to crypto, and more.

As seen around the world, investment into digital transformation is paving the way for growth across the Central Europe, Middle East and Africa (CEMEA) region – a trend reflected in the increasing share of consumers and retail merchants making transactions online.1  In tandem, prospects for new businesses are encouraging, especially in Sub-Saharan Africa (SSA): while start-ups across CEMEA are seeing triple-digit growth rates for investment, the figures for SSA are particularly strong, with investment up 285 percent to US$2,120m and deals up 26 percent to 392 in number in the last year.2

How Acceptance is Key to Growth
How has the digital transformation seen around the world supported current and future growth in SSA? Acceptance of new forms of digital payments is key, businesses say. In a recent Visa survey3, three quarters of small businesses indicated that accepting digital payments was essential to their growth, with 90 percent reporting that pivoting to ecommerce – which relies on digital acceptance – had helped them survive the pandemic. “If there is going to be a digital payments revolution,” says Aida Diarra, “it cannot be limited to large businesses. In solving for this segment, we need to address the complexity, drive lower costs and innovate to create more frictionless ways for SMEs to begin accepting payments.”

With this goal in mind, Visa has launched Tap to Phone, mobile POS (point of sale) technology – where sellers download an app to enable their smartphones to accept payments – in several markets in the region. The process has underlined the importance of a robust internet infrastructure, with connectivity (and the related costs) and integration with other business management systems both key to success in this area.

Economic Challenges

The global economic outlook turned gloomier in recent months amid rising energy and food prices, and aggressively tighter monetary policy in advanced economies, with interest rate hikes in the U.S., E.U. and the U.K. The impact of the global economic slowdown is being felt throughout Sub-Saharan Africa; the region has been quite sensitive to the rise in food and energy prices, weighing heavily on households’ budgets, who often allocate a large share of their income to food purchases compared to other regions – around 40 percent of income. Higher consumer prices and rising public debt remain key challenges for the region going forward.

Nonetheless, as Aida Diarra, Visa’s Senior Vice President and Head for SSA, says: “Our region is open for business and the volume of activity we encounter in conversation and in the news demonstrates how dynamic our industry is. More players are entering the market in response to the wealth of opportunities that exist.”6

Inside the Great eCommerce Pivot
In SSA, as seen around the world, reduced movement and an increased wariness of handling cash has encouraged a shift from in-person to digital transactions – which can present new risks to manage. Aida Diarra explains: “There has been an accelerated growth in e-commerce as more consumers have become comfortable with transacting online and that necessitates a need to secure those transactions.” Indeed, the Global Cybersecurity Outlook reports a 31 percent increase between 2020 and 2021 in terms of cybercrime accelerated by the pandemic.

In response, and pioneered by Visa, tokenization – where a customer’s card number is replaced with a 16-digit equivalent, or token – continues to be a simple but powerful concept to protect sensitive payment data, to secure digital payments and thereby accelerate eCommerce acceptance. Through Visa Token Service (VTS), Visa has already issued more than 4 billion network tokens, surpassing the number of physical cards in circulation globally. Some 8,600 issuers and 800,000 merchants now use the service worldwide, leading to a 28 percent reduction in fraud rates and a 3-point increase in transaction approval rates –so helping to boost sales for merchants, while also saving them money on fraud-related expenses.

In SSA specifically, Visa issued nearly 1.2 million tokens, across 17 countries, in the month of August this year alone. This clear appetite among issuers, acquirers, merchants and consumers to use Visa tokens reinforces that the future of money is truly digital – and that digital money must, as with any form of currency, be built on trust. That is why Visa will continue to prioritize enabling tokenization in the region, working with local eCommerce partners (including on its Click to Pay service, which eliminates passwords and entering card details manually), with the goal of taking tokenization to 70-80% of local transactions.

Accelerating Contactless
If digital sales are developing, in-person transactions are changing shape also. Nearly half of all card-present transactions in Sub-Saharan Africa are now contactless, another shift accelerated by the pandemic. This growth is largely concentrated in South and East Africa, so the opportunity is to support contactless take-up in the rest of the region – because a market with strong contactless adoption not only depends less on cash, with all the benefits that can bring, but its merchants see a lift in transactions also.

So how is this best achieved? “Contactless only grows when the entire ecosystem engages to fully understand the landscape and its barriers,” says Aida Diarra. “For example, engaging regulators and retailers to establish reasonable limits and a risk management approach that all stakeholders are comfortable with.” To that end, Visa has upped its efforts with contactless in Botswana, South Africa and Kenya, using what it has learned in those markets to launch contactless pilots in four more SSA countries, involving five urban transport operators.

Collaboration with Fintech 2.0
Of course, just as recent years have seen consumers embrace digital payments, businesses have responded by using digitalization to transform their operations. “The pandemic has emerged as the trigger to push digital adoption and create the Fintech 2.0 era,” explains Aida Diarra, “The accelerated demand for digital services brought on by the pandemic has also brought a demand for a more integrated customer experience and less fragmented offerings – a question of ease and for many consumers a question of cost.”

Here, there is an opportunity to find more agile ways to work with fintechs, in solving for the need for integrated financial services at scale and – crucially – at the right cost. Visa is working both to address the readiness of the payments ecosystem and accelerate progress in this area, as well as connecting traditional and non-traditional players to help achieve these goals.

Building Trust in BNPL
In SSA countries, consumers increasingly not only expect to pay how they want, but when it suits them also. The rise of buy-now-pay-later (BNPL) transactions can be attributed to several factors: the flexibility they offer the consumer; growing adoption by merchants; and their appeal for both online and physical purchases. As a result, younger consumers in particular have embraced BNPL as a payment option.

While spending by this method is still relatively low compared to that on cards, its growing popularity deserves focus: BNPL is expected to account for roughly 24% of all global ecommerce transactions by 2026, up from 9% in 2021. This is illustrated by merchant’s appetite for the solution, with 65% of merchants in one survey planning to add BNPL as a payment method by 20224. The benefits are clear, says Aida Diarra. “Globally, Visa has seen BNPL drive a bigger basket and the purchase of higher ticket items. We’re also seeing merchants embed BNPL in consumer shopping journeys and how consumers are using BNPL for everyday purchases as well.”

As with any new payment method, practical realities are still catching up. In SSA, Visa is working to enable the BNPL ecosystem in key markets by incentivizing development for processors and gateways. Specifically, Visa is supporting the ecosystem for installment payment services (that let consumers use their existing Visa cards to enter into BNPL plans) in several SSA countries by launching installment payments with key card issuers.

Securing Crypto for Consumers
BNPL is not the only new way to pay that is growing in popularity in SSA. Africa is the fastest growing cryptocurrency market among developing economies, as well as the third-fastest growing market in the world.

Our view is that interest in crypto will continue,” says Aida Diarra. “Our research shows that consumers are intrigued by crypto – 85 percent of South African consumers surveyed are interested in their bank offering a crypto card, with 93 percent reporting they’d be interested in crypto rewards as a “risk-free” way to get into crypto. Consumers would also be more willing to acquire crypto from their primary bank.”5

As well as businesses, monetary authorities are also interested: many central banks are considering central bank digital currencies (CBDCs) as a way to bring financial services to people without bank accounts. Here, sustained growth will hinge on building trust, which includes addressing security and regulatory requirements. Visa anticipates incoming regulation, including ‘know your customer’ requirements for user verification, as well as in relation to anti-money laundering and cybersecurity goals. As a trusted name in payments, Visa is helping banks navigate cryptocurrency; engaging central banks on CBDC design and pilots and working to make it easier for merchants to accept crypto, to best serve consumers.

As with all aspects of digital payments, what consumers want will drive progress and, by extension, growth. As Aida Diarra says: “Consumers have to be met where they are today so they can be better served tomorrow. With the speed at which change occurs, digital-first commerce will soon be the new normal, the faster we adapt, the more competitive we’ll be.”

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All brand names, logos and/or trademarks are the property of their respective owners, are used for identification purposes only, and do not necessarily imply product endorsement or affiliation with Visa.

1Visa Business and Economic Insights, VisaNet
2Visa Business and Economic Insights; Analysis of data from Apptopia, Magnitt State of Startup Funding - 2022 Emerging Venture Markets Report
3Visa Back to Business Study, 2021
42022 Commerce and Payment Trends Report, Global Payments: https://docs.globalpaymentsinc.com/v/2022-commerce-and-payment-trends-report-en#pf27
5Visa Covid -19 Tracker, Wave 4, October 2021
6Visa Business and Economic Insights

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