PayPal ramps up Africa presence with Equity partnership
25 October 2013, 19:13
Nairobi - PayPal, the payments services arm of eBay, has entered a partnership with one of east Africa's biggest lenders, Equity Bank, to tap into the fast-growing African economies.
African states, enjoying annual economic growth averaging 5 percent, have lagged developed counterparts in the adoption of electronic commerce. But companies such as online retailer Jumia, a would-be African Amazon, are eyeing the market.
Efi Dahan, Paypal's regional director for Africa and Israel, said the company was looking for triple-digit growth on the continent, without providing specific numbers.
"We understand the potential of this market and we will definitely extend the business in other countries," Dahan told Reuters at an event to sign the deal on Friday.
He said the California-based business entered South Africa three years ago and they were pleased by the growth there.
Showing the growth potential, James Mwangi, Equity Bank's chief executive, said Kenya's share of e-commerce transactions was less than one percent of all trade transactions, while e-commerce in South Africa was 4 percent of the total.
Mwangi, whose bank is the largest by customers in Kenya, said he hoped the bank would be allowed to offer the services to the rest of east Africa, where Equity runs outlets in Tanzania, Rwanda, Uganda and South Sudan.
The service links PayPal online accounts with accounts at the bank, allowing shoppers and merchants to buy and sell across the globe through the Internet.
Mwangi said those who sign up for the service, like local travel and leisure firms offering safaris online, will have access to a market of 137 million PayPal users.
"By merely registering, one gets into a market that is larger than the east African population," he said referring to the 120 million people who live in the region.
Firms offering electronic commerce services on the continent face obstacles like a lack of proper, precise addresses, which hinder the delivery of goods bought and paid for online.
Still, a company like Jumia is betting that it can propel a middle class out of the street markets and straight onto its websites, it said on Thursday.
Equity also expects the millions of Kenyans abroad to tap the PayPal service, raising its share of the remittances business to 30 percent from 16 percent in a year, Mwangi added.
Remittances are the fourth-largest source of foreign exchange in east Africa's biggest economy after revenue from tea, horticulture and tourism. A total of $1.17 billion was sent back to Kenya by its citizens abroad last year.