BUSINESS NEWS - Peer-to-peer business lending is the third-largest finance model in Africa, totalling $16m in volume in 2014 and 2015, and it's growing in popularity.
The Africa and Middle East Alternative Finance Benchmarking Report, published in February, is the first comprehensive study of the size and growth of crowdfunding and P2P lending markets in Africa and the Middle East. It includes additional chapters on the regulatory landscapes in Africa.
Growing Kenya and South Africa are the market leaders, raising $16.7m and $15m respectively from online channels in 2015. Peer-to-peer business lending had a lower average deal size of $41,000, with an average of 24 lenders each.
The market is relatively evenly distributed across 10 core countries. South Africa had the largest number of online alternative finance platforms, with eight surveyed respondents. Egypt and Morocco followed, with three domestically-based platforms each, and then Ghana and Nigeria, with two per country. Senegal, Uganda, and Zimbabwe had one surveyed platform each.
According to the report, the East Africa region has the largest market share of the alternative finance market. In 2015, East Africa accounted for 41% of total African market share, while West Africa accounted for 24% and Southern Africa accounted for 19%.
South African scenario
The make-up of the South African market differs markedly from the rest of Africa. In 2015, the vast majority of market activity – $13.8m – came from peer-to-peer consumer and business lending, with the remaining $1.2m spread across microfinance, donation-based and reward-based crowdfunding.
The rapid growth and emergence of online peer-to-peer lending models in South Africa suggests that this model will likely dominate the national market, and could potentially propel South Africa forward as the emerging market leader for both online consumer and business peer-to-peer lending in Africa.
