Core Insights - The alternative lending market in Africa is projected to grow at a compound annual growth rate (CAGR) of 14.8%, reaching a market value of US$4.8 billion by 2025 [1] - The market has experienced robust growth from 2020 to 2024, with a CAGR of 14.7%, and is expected to continue growing at a CAGR of 14.2% from 2025 to 2029, reaching approximately US$8.1 billion by the end of 2029 [2] Market Overview - The report provides a detailed analysis of the alternative lending industry in Africa, covering over 100 key performance indicators (KPIs) such as loan disbursement value, volume, average loan ticket size, and penetration rate [3] - Africa's alternative lending space is evolving with trends such as Buy Now, Pay Later (BNPL) growth, alternative-data underwriting, and institutional capital inflows [4] BNPL and Embedded Credit - The BNPL market in Africa is projected to grow annually, particularly in digitally connected economies, with more merchants integrating installment financing into checkout experiences [5][6] - Regulatory oversight may tighten in response to rising usage and default risks associated with BNPL and embedded credit [6] Alternative Data Utilization - Alternative lenders are increasingly using nontraditional data sources to assess creditworthiness for underbanked segments, including mobile usage and transaction history [7] - Standardization of alternative-data scoring and improved default prediction accuracy are expected, with lenders leveraging proprietary data partnerships to outperform generic models [8] Institutional Capital Inflows - Alternative lending in Africa is attracting institutional capital and private credit lenders seeking higher yields, particularly in fintech-originated credit and SME lending [9] - Partnerships between capital providers and originators are expected to scale credit into various segments, increasing competitive pressure on credit standards and deal transparency [10] Embedded Credit Integration - Alternative credit is being integrated into digital platforms and mobile money ecosystems, which is particularly relevant in markets with strong mobile money usage [11] - The quality of integration and underwriting precision will determine the margin and risk premium on embedded credit [12] Competitive Landscape - The alternative lending landscape in Africa is heterogeneous, with strong incumbents in markets with favorable digital infrastructure, while many participants compete in niche segments [13][14] - Traditional banks still dominate consumer and SME lending, with alternative lenders focusing on underserved segments such as micro loans and embedded credit at point-of-sale [15] Key Players and Market Dynamics - Leading examples include 4G Capital in Kenya, which offers unsecured working capital loans, and Yoco in South Africa, which is expanding its reach among SMEs [21] - New entrants often come from mobile money platforms or fintechs with existing payment relationships, and many alternative lending models are financed through partnerships rather than full acquisitions [21] Regulatory Environment - Regulators in many African countries are beginning to create or update frameworks around fintech lending, focusing on consumer protection and credit risk rules [21] - The forecasted period is expected to see increased regulatory maturity, with more countries defining licensing and supervision for digital lenders [21]