Connecting Africa is part of the Informa Tech Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them. Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 3099067.

Digital Inclusion

Mastercard expects e-commerce growth to stay in 2021

Article Image
Mastercard believes that 20-30% of the COVID-related shift to e-commerce spending will become a permanent feature going forward with even more opportunities to boost financial inclusion in the Middle East and Africa (MEA).

The Mastercard Economics Institute's new Economy 2021 report shows a sharp global shift toward digital platforms, driven by changed consumer behavior, mobility restrictions and the necessity to generate business revenues beyond brick-and-mortar locations.

The trend away from cash is expected to be more persistent in Middle Eastern economies such as the UAE, but the e-commerce opportunity in East Africa is significant to bridge the digital divide.

This shift was also highlighted in a 2020 Mastercard e-commerce study, which revealed that 73% of consumers in the Middle East and Africa (MEA) were shopping more online than they did before the pandemic.

"The digital divide in East Africa remains a challenge. The e-commerce opportunity in Africa is, therefore, significant. The need to bring the population into the digital economy first through online banking solutions is paramount to delivering growth over generations to come. The opportunity for fintech disruption in Africa is high," the report reads.

Alongside e-commerce, the report anticipates automation around the fourth industrial revolution, contactless interaction, local delivery services and "tele-everything" to be other long-lasting trends.

Advancing financial inclusion

The report notes that continued digitalization in MEA is key to advancing financial inclusion in the region.

This is especially relevant in regions such as East Africa, where IMF research found that even where financial inclusion through traditional banking services was declining, expanded access to digital tools and services increased financial inclusion.

This trend is set to continue in 2021, especially in the more digitally advanced economies such as Ghana, Kenya and Uganda.

Fintech disruption in online banking is set to be a key driver for financial inclusion, especially in East African economies.

Brick-and-mortar business creation is expected to decline further in 2021 in favor of online businesses and the adoption of initiatives that connect a merchant's sales data with access to capital.

"This growth of the digital economy represents a 'coming of age' for e-commerce, a turning point in bridging the digital divide. We are heading for a multi-speed global recovery that favors low-touch over high-touch," said David Mann, chief economist for Asia and MEA at Mastercard.

"Small businesses and micro merchants are especially crucial to the region's economies and by enabling them to accept digital payments, we can connect more people and communities to financial freedom and eventual prosperity."

As digital innovation improves and Internet access increases, digital payment solutions such as contactless payments, virtual card numbers and QR codes offer more possibilities than ever before, the Mastercard Economics Institute said.

A young future

A key success factor for growth of e-commerce and advancing financial inclusion is the young and fast-growing populations across MEA.

Africa is home to 19 of the world's 20 youngest countries, and the Middle East and North Africa (MENA) region has the largest youth population in the world, with more than half of residents under the age of 25.

Millions of young consumers will become mobile users for the first time and the GSMA expects sub-Saharan Africa to cross a 50% penetration rate of unique mobile subscribers by 2025.

Young and digitally savvy populations across MEA are key to long-term growth outlook, but youth unemployment poses a threat to growth prospects, the report added.

The Staff, Connecting Africa

Innovation hub

Story

Africa can leverage GenAI for economic growth – Microsoft

A whitepaper on generative artificial intelligence (GenAI) and the future of work has found that the African continent, with its young population, can leverage AI to drive economic growth.

Registration opens for Africa Tech Festival 2024

Registration has opened for the 2024 edition of Africa Tech Festival, the continent's leading platform for technology innovators, specialists and thought leaders.

More Innovation hub

Latest video

More videos

Partner perspectives

All Partner Perspectives

Sponsored video

More videos

Follow us on X

Industry announcements

More Industry announcements

Upcoming events

Cyber Revolution Summit
August 9, 2024
Gaborone, Botswana
Africa Tech Festival 2024
November 11-14, 2024
Cape Town, South Africa
More Upcoming events

Africa Tech Perspectives

Story

Uber's Marjorie Saint-Lot on inclusion and sustainability in Africa

Uber's Country Manager for Ghana and Cote d'Ivoire, Marjorie Saint-Lot, shares how the ride-hailing company is approaching public-private partnerships, environmentally friendly initiatives and gender inclusion in Africa.

Story

The 100 most influential African leaders in 2023

A new report from Africa Tech Festival and Connecting Africa puts a spotlight on the top 100 African leaders in the telecoms and technology sector in 2023.

Story

Deep dive into East Africa's tech startup ecosystem

New survey reveals a lack of access to investors, reliance on international VCs and global recession trends as the biggest barriers for East African tech startups to access funds.

More Africa Tech perspectives

Guest Perspectives

Story

How e-mobility could transform Africa's transport sector

By Francis Hook

ICT analyst Francis Hook delves into Africa's e-mobility sector and unpacks the challenges faced locally and the benefits the move to electric vehicles could bring to urban transport systems.

Story

Omdia View: April 2024

By Omdia Analysts

April 2024's telecoms highlights in the Middle East and Africa included a license for Starlink in Ghana, new mobile termination rates in Ethiopia, and 6G trials in Bahrain – that and more in the latest Omdia View.

More Guest Perspectives

Like us on Facebook

Newsletter Sign Up


Sign Up
Tag id test-002