Kenya’s Pesapal eyes payments expansion to Nigeria, Ghana and South Africa

By David Whitehouse
Posted on Tuesday, 31 August 2021 15:56

The time-consuming queues for ATMs shown here in Cape Town in March may encourage greater use of digital payments. REUTERS/Sumaya Hisham

Digital-payments platform Pesapal is considering the possibility of expanding to Nigeria, Ghana and South Africa, CEO Mark Mwongela tells The Africa Report.

“We have built a business that can scale across Africa,” Mwongela says from Nairobi. “Our platform can be adapted to any market.” Ghana and Nigeria are “interesting markets” which have “tremendous growth” potential, he says.

Economies in Africa are moving towards real-time payments and digital currencies as Covid-19 restrictions accelerate demand for alternatives to cash.

Nigeria and Ghana both plan to adopt digital currencies, while South African banks are adopting the Rapid Payments Programme to allow instant interbank payments in 2022.

Mwongela’s target is for the company to become “dominant” in its current markets in the next year, and to enter new markets in either West or Southern Africa in the next three years.

Within five years, Pesapal aims to be present in all of Africa’s major digital economies as it seeks to become the continent’s largest digital-services provider.

  • Important factors in deciding where to expand will be the share of population with mobile devices and the number of large and small businesses, Mwongela says.
  • The company will need to have sufficient scale in its existing markets before entering new markets, he adds.
  • Covid-19 “has taught us to take it a step at a time”.

Real-time payments

Pesapal, founded by Agosta Liko in 2009, says it is the only company in Africa to offer e-commerce, point-of-sale and consumer applications on one platform. The company operates in Kenya, Uganda, Malawi, Zambia, Rwanda and Zimbabwe. Mwongela became CEO in 2018.

  • The company agreed a partnership with Visa in 2020 to enable more small businesses to accept Visa payments.
  • Pesapal would be open to the idea of an industrial or financial investor “if our visions marry” over the long term, Mwongela says.

In July, Pesapal obtained a national application service license from the communications regulator in Tanzania. The country’s central bank in July started to roll out the Tanzania Instant Payments System, designed to allow real-time payments between financial-service providers.

Operating in Tanzania may mean new partnerships, Mwongela says. “As we go along we find businesses that are complementary. It’s a natural trend.”

The company was also accredited by Kenya’s central bank as a payments-solutions provider at the start of June.

Some in the industry have criticised the Kenyan government as it seeks to widen the scope of taxes on digital services.

  • The taxation “validates that there has been growth” in the industry, Mwongela says.
  • Digital-services taxation is “a necessary move by government” and it is “too early to say if it is optimal. There will be a learning process.”
  • There is, Mwongela says, a “conversation to have” involving governments about how the financial-services industry can help the sectors that have been worst affected by Covid-19, such as travel and hospitality.
  • To an extent, he says, these businesses have been “left to fend for themselves”.

Bottom line

Pesapal is betting that Africa’s shift to real-time payments will create expansion opportunities.

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