This is an excerpt from the
Future of Embedded Finance in Africa 2025 report.
Embedded finance is changing the payment landscape in Africa. With it, non-financial businesses are offering specialised services to consumers across the continent.
Now, there are BNPL platforms with virtual accounts customers can fund to pay for products and services. Ride-hailing products now allow you to ride and pay later. This was not the case a few years ago, as there was still a lot of focus on growing payment
products.
As more businesses and consumers across the continent seek more seamless, integrated financial solutions, the potential for embedded finance to help grow commerce and drive financial inclusion is immense. But to realise this potential, we must solve the
challenges limiting its growth and scale and take advantage of its opportunities.
Its growth can make solutions that use embedded finance ubiquitous in Africa, just as we already have for traditional banks and some financial services across the continent. The question now is: what will it take for embedded finance to truly scale across
Africa?
Reliability will boost scalability
Embedded finance is already growing, thanks to increasing mobile phone penetration and an expanding digital economy. The Nigerian market alone was worth
$1.1 billion in 2023 and is projected to grow to $3.5 billion in 2029 .
However, scalability depends on one key factor: reliability. African businesses, whether they are small merchants or large enterprises, need solutions they can depend on—solutions that can be tailored to their specific needs.
Businesses and consumers in Africa are unique as the consumers require very bespoke services and have currency and payment channel preferences. Consumers in Nigeria don’t use the same currency or payment channel as consumers in the Benin Republic, which
is a border country. So, businesses need a provider that can help onboard consumers across Africa. This is their basis for trustworthiness and reliability. Providers, PSPs, Banks and Infrastructure companies must build with this diversity in mind.
Data privacy and security: The foundation of trust
Financial data is one of the most sensitive pieces of information a business can handle. For businesses, especially SMEs that may not have robust infrastructure, handling customer data securely is a challenge.
The growing risk of cyberattacks and fraud across Africa—up 112% in Nigeria alone between 2019 and 2023—makes scaling embedded
finance difficult.
For providers and SMEs to scale embedded finance, all must have access to the necessary security tools and compliance frameworks that safeguard customer trust. All stakeholders must ensure that even the smallest enterprises can offer financial services with
the same level of protection and reliability as the most prominent institutions. This is a challenging but necessary step towards growth and scalability.
To scale embedded finance is costly
While the benefits of embedded finance are clear, the cost of implementing these solutions can be a major barrier, especially for smaller businesses. Access to the right technical talent, compliance certifications, and infrastructure can run into thousands
of dollars—resources that many African SMEs simply don’t have.
To address this, providers and bigger infrastructure companies must find ways to make it easier for smaller businesses to access the solutions they need. This applies to simple things like making your API documentation easy to understand, building low-code
payments solutions for business owners, and finding ways to lower the barrier of entry to accessing payment tools.
For embedded finance to scale, it must be affordable and accessible to all businesses.
Bridging the trust gap between digital businesses and consumers
Traditional financial institutions dominate the African landscape so trust remains a significant barrier to adoption. Consumers are used to the physical presence of banks, and the transition to purely digital financial services is difficult. The question
most ask is how do you trust something you can’t see?
With only 25% internet penetration in Sub-Saharan Africa as of 2023, doing business is still very much physical and a totally digital business model might not be the best approach.
While the future is digital, having a hybrid business model might be the way to go. To offer digital services and also have a physical store/building, that consumers can walk into. This way, businesses can build trust with the consumers they’re building
for.
Over time, the hybrid model can slowly shift to a digital one. This will take time, but businesses that play the long game will ultimately win.
What roles do we all have to play to scale embedded finance in Africa?
Scaling embedded finance in Africa will require a collaborative effort from banks, fintech companies, regulatory bodies, and service providers. Kora’s mission is to be at the heart of this, providing the infrastructure that allows businesses of all sizes
to grow across Africa.
As we look ahead, the opportunities are vast. 90% of transactions in Africa are still cash-based, and embedded finance can help bridge that gap. There’s a need for companies to build scalable and reliable solutions.
The growth of digital transactions is inevitable, and the companies that position themselves now to provide reliable, secure, and affordable solutions will be the ones that shape the future of finance in Africa. Embedded finance will not only drive this
transformation—it will redefine it.
At Kora, we are creating the solutions that will enable businesses across Africa to embrace embedded finance and build an Africa that is closer, financially.
