The Middle East & Africa

The Region

The continent of Africa and the neighbouring Middle East present a very diverse face, with many differences in population, politics, economy and payment culture. To get a measure of this complex picture, PPRO focused on nine economies within the region: Egypt, Israel, Kenya, Morocco, Nigeria, Saudi Arabia, South Africa, Turkey and the United Arab Emirates (UAE).

Sub-Saharan Africa is home to some of the fastest growing economies in 2019, with an overall growth forecast at 3.8%, a sliver above the 3.7% global forecast. This is largely down to the steady increase in commodity prices, the improvement of the global economy and a concerted effort to get the continent’s finances in order. Earlier this year, the Brookings Institute repeated a warning it had made in 2018 that at least fourteen of the region’s economies were either in debt distress or at risk of it.

Local market knowledge is a must for anyone trying to enter these markets. To varying extents, oil price controls the economies of Egypt, Nigeria, Saudi Arabia and the UAE, so careful timing would be critical to entering these markets. The UAE and Israel are both prosperous and booming, but it is important to understand local laws to avoid pitfalls. The Egyptian government is particularly encouraging online retail, while innovation in Kenya is driving a boom in its small marketplace.

South Africa is certainly prosperous, boasting the second-highest GDP in Africa, but it’s only growing slowly and suffers stark inequality. And any entry into Nigeria should carefully examine the stories of those enterprises that have failed and make every effort to avoid the mistakes of the past. Then, in Turkey, things might look bleak right now, but the prospects for the future are much more encouraging. That’s where there’s money to be made.

The Middle Eastern & African
Payment Landscape

The Local Payment Culture

The most common way to pay for online purchases in Africa and the Middle East is by card, which has a 44% market share. It is worth noting, however, that credit cards are not popular in all the countries this profile covers. In Kenya, for example, cards make up only 23% of payments and it is cash at 44% that is the most popular payment method. Visa holds the lion’s share of the market at 44%, Mastercard has 34%, local and other schemes have 20% and American Express 1%. Cash is the next most popular online payment method, with 27% of the e-commerce market. Bank transfers have 12%, and e-wallets and various other methods have just under 9% each.

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The E-Commerce Market

To try and get a picture of what was happening in African and Middle Eastern e-commerce, PPRO profiled nine of the area’s most promising markets: Egypt, Israel, Kenya, Morocco, Nigeria, Saudi Arabia, South Africa, Turkey and the UAE. Together, these countries have an e-commerce market worth over £61 billion which is growing at a rate of 27% a year. This growth rate is fuelled by several factors: rapidly modernising economies, a youthful population and a demand for global brands.

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In Kenya, 56% of the population is banked, and 60% have access to a smart phone. Most of these people rely on financial technology for access to financial services. Kenya’s leading mobile money transfer, financing and microfinancing solution, M-Pesa, has long been claiming a rising percentage of Kenya’s GDP and, by some measures, 2018 was the year when the total value of Kenya’s mobile money transactions surpassed its GDP. This astronomical rise in mobile banking has helped millions of unbanked people in Kenya to gain access to financial services.

Meanwhile, in Nigeria, there has been a disappointing turn away from e-commerce. Once-thriving start-ups are folding, downsizing or changing direction. This has been blamed on a lack of middle class with both a suitable disposable income and enough tech savvy. As such, any e-commerce venture into Nigeria would do well to study the fall of these businesses and learn from their mistakes.

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PPRO Country Insight Egypt

Report / 20.08.2019

The Egyptian government’s economic reform programme seems to be paying off. The country has had a tough few years. In the wake of the Arab Spring, foreign direct investment in Egypt’s non-oil economy – which peaked in 2007 – had dropped to only $600 million in Q2 20182.


PPRO Country Insight Israel

Report / 20.08.2019

Napoleon is said to have preferred lucky generals. “I believe in luck,” he is reported to have said.“ And the wise man neglects nothing which contributes to his destiny.” The Israeli economy seems to be doing well on both fronts.


PPRO Country Insight Kenya

Report / 20.08.2019

Kenya is something of a star performer in the African digital economy. Its online payments sector, led by mobile phone-based money transfer service M-Pesa – now in partnership with Western Union, is a sector leader and a standardbearer for the African digital revolution.


PPRO Country Insight Morocco

Report / 03.04.2019

When Morocco hits the headlines in Europe, it’s usually because of the country’s role in the Mediterranean migration crisis. The country is a source of emigrants and on one of the main migrant routes from West Africa.


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