As China increases its influence into Africa, we have seen Alipay increase their footprint on the continent exponentially. In this piece, Traderoot Africa CEO Craig Ireland analyses why China sees the huge potential in Africa, and what benefits Alipay will bring to the region.
Although access to banking has improved significantly over the past few years, there is still a massive percentage of people living on the African continent who remain unbanked. With more than 50% of Africa’s population lacking any form of bank account, it’s no surprise that Alipay see’s the massive potential for growth.
Traditional banks are struggling more than ever to reach unbanked people on the continent. With a vast majority of people living in Africa being in a low-income bracket, opening a bank account with exorbitant fees simply doesn’t make sense. Furthermore, bank branches are not always conveniently located, which often means increased travel costs, long wait times and intimidating administrative processes.
This lack of traditional banking infrastructure and exorbitant fees has presented massive opportunities for fintech and mobile communications companies. Due to these factors, mobile money has been thriving in Africa, with the continent boasting some of the highest levels of mobile money usage in the world.
The COVID-19 pandemic has further accelerated the adoption of digital payments. Nigeria’s Inter-Bank Settlement System reported that the country witnessed an 88% year-on-year growth in electronic payments in the first quarter of 2021, with mobile payments surging by nearly 200%.
What is Alipay’s Role in Africa?
Vodacom has developed Africa’s first super-app, VodaPay, with help from Alipay and Traderoot Africa. The super-app will allow a broad range of services for subscribers including taking out loans, shopping online, entertainment and standard mobile payments.
The Alipay App reaches over one billion users and 80 million merchants worldwide and is the primary method used by buyers and sellers to complete payment transactions on Alibaba’s platforms. The partnership between Alipay and Vodacom will mean that Africa will be able to benefit from all of the technological advances and innovation being implemented by Alipay on an almost daily basis.
The VodaPay super-app will benefit millions of unbanked people in Africa, and will likely be viewed as better and more compelling than cash, with the additional benefit of a variety of value added services. The super-app will provide millions of people access to services which they have never had the opportunity to use: Peer-to-peer money transfers, access to loans and investments, as well as online shopping are among the various additional services that unbanked people in Africa will soon be able to benefit from.
There is no doubt that this partnership is set to disrupt traditional banking in Africa in a significant way, and Traderoot Africa is excited to be part of this disruption. If you would like to learn more about innovation like this within Africa’s fintech space, speak with one of our consultants and let’s set up a strategic overview of how we can assist your operation.