BNPL Catches on With African Shoppers

In these difficult economic times, the possibility of paying for products in several interest-free installments, popularly known as buy now, pay later (BNPL), has never been more attractive to consumers around the world.

Across the African continent, the service is starting to gain traction in many countries as digitally savvy and highly unbanked populations look to take advantage of the innovative payment solution.

One major deal that made waves last year was the acquisition of South Africa-based BNPL player Payflex, who was acquired by Australian firm Zip as part of the BNPL giant’s global expansion plans.

Launched in 2019, Payflex is considered the first and largest BNPL player in South Africa, one of Africa’s biggest economies. The firm collaborates with leading local brands such as Runwaysale and Superbalist, and has grown from a base of 70 merchants in 2019 to over 1,000 active merchants today that serve more than 135,000 customers.

The Zip-Payflex deal was an indication that the continent, which remains largely untapped by global BNPL players, is ripe for disruption. Since then, several companies have emerged, raising millions of dollars from global investors to boost the service across the region.

Read more: Kenyan BNPL startup Lipa Later Raises $12M, Eyes More African Markets

This month, Lipa Later, a Kenya-based consumer credit and BNPL platform, raised $12 million from a group of international investors to expand its services across the region.

Launched in 2018, the firm said it is looking to grow its presence within its existing markets of Kenya, Rwanda, Uganda, and Nigeria while expanding to several new African markets in the next 12 months, including Ghana and Tanzania.

Additionally, today (Jan. 20), Morocco’s B2B eCommerce and FinTech platform Chari announced that it had secured a bridge round at a $100 million valuation as it plans to venture into the BNPL space, starting in Morocco before expanding to Tunisia and other French-speaking African countries.

“Chari will use the money of this bridge round to test the BNPL services with its existing customers. Upon successful results, Chari will acquire a local credit company to enable shop owners to lend money to their end-users and further grow their business,” CEO Ismael Belkhayat said in a statement, per TechCrunch.

Egypt Shows BNPL Promise

Egypt is another country that is showing huge growth potential, with the BNPL trend rapidly catching on with shoppers amid rising inflation that is putting pressure on consumers.

Last month, Egyptian FinTech company Sympl, which launched just six months ago, announced a $6 million seed funding raise led by the United Arab Emirates’ Beco Capital, PYMNTS reported.

Related: Buy Now, Pay Later Catches on in Egypt With $6M Investment in Sympl

“[…] There is a huge opportunity for buy now, pay later here in Egypt, given its very populous market,” Mohamed El-Feky, the company’s founder and CEO, told TechCrunch. “It’s a consumer purchase-driven market where we have a lot of accessibility to consumer products and services, online or offline.”

Read also: Black Friday Campaign Creates Strong Customer Engagement on Jumia Egypt Platform

For its Black Friday sales, Africa-focused online marketplace Jumia also tapped into the growing trend through its Egypt subsidiary — one of the leading eCommerce platforms in the country — by partnering with National Bank of Egypt and other banking institutions to offer BNPL service to consumers at zero interest.

Through the deal, consumers using the JumiaPay App, the firm’s electronic payments platform, were able to spread payments over 24 months using credit cards from institutions including Banque MISR and Alexandria Bank.

In a recent interview, Hesham Safwat, CEO of Jumia Egypt, said the rising inflation in Egypt and the pressure it has put on consumer finances has led to a boom in BNPL that was likely to extend well beyond Black Friday.

It’s the reason why Jumia, JumiaPay and valU, a leading BNPL platform in the Middle East and North Africa region, recently signed an agreement to enable valU to become a payment solution via Jumia and JumiaPay.

The deal will link valU and JumiaPay for electronic payment services, offering clients nine months of interest-free installments when shopping on the Jumia platform.