Happy with the growth it experienced since entering South Africa, U.S.-based PayPal has partnered with Equity Bank, one of East Africa’s biggest lenders, to tap the fast-growing African economies, Reuters reports on MSNMoney.
The payments services arm of eBay, PayPal hopes to see triple-digit growth on the continent, said Efi Dahan, Paypal’s regional director for Africa and Israel.
African states, enjoying annual economic growth averaging 5 percent, have lagged developed counterparts in the adoption of e-commerce. But companies such as online retailer Jumia, a would-be African Amazon, are eyeing the market, the report said.
“We understand the potential of this market and we will definitely extend the business in other countries,” Dahan told Reuters.
California-based PayPal entered South Africa three years ago and was pleased by the growth there, he said.
James Mwangi, Equity Bank’s CEO, said Kenya’s share of e-commerce transactions was less than 1 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 could offer the services to the rest of east Africa. Equity has branches 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 around the world through the Internet.
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, Mwangi said.
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“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.
Companies offering e-commerce services on the continent face obstacles like a lack of proper, precise addresses, which hinder delivery of goods bought and paid for online.
Still, a company like Jumia is betting it can propel a middle class out of the street markets and straight onto its websites, it said Thursday.
Equity also expects the millions of Kenyans abroad to tap the PayPal service, raising its share of the remittances business from 16 percent to 30 percent in a year, Mwangi said.
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.