A new report by Duplo, a business payment platform for African businesses, has revealed that African businesses are transiting from cash-based business-to-business (B2B) payments to digital because of ease of use, reliability, and speed.
According to the State of B2B Payments in Africa report, more than 1,000 business owners from Kenya, Nigeria, South Africa, and Egypt surveyed, cited these features as the driving force for their B2B payments.
The report also revealed that bank transfers are the most common medium for making and receiving payments between businesses today, more common than cash, cheques, and mobile money.
Research analysis
Analysing the findings of the survey, Duplo said: “When asked what they liked about their current payment methods, 29% of respondents chose ease of use, 28% chose reliability and 18% chose speed. More than digitised processes (10%), affordability (10%) and customisation (5%).”
“When asked which methods their organisations used for making payments to other businesses, 85% of respondents chose bank transfers as one of the ways they made payments, compared to 60% for cash, 23% for cheques, and 17% for mobile money. When asked about receiving payments from other businesses, 62 percent said they received payments via bank transfers, compared to 59% for cash, 32%for cheques, and 15% for mobile money,” it added.
The report also highlighted that 44% of businesses still have to wait more than 24 hours to receive payments from business customers and partners. 3% take up to 7 days to receive payments, 17% take up to 30 days and 3% take more than 30 days to receive business payments. This presents a significant challenge for businesses that are often unable to maximise the opportunities available to them due to cash flow restrictions induced by complex payment flows.
Commenting on the findings of the report, CEO and co-founder of Duplo, Yele Oyekola, said: “African businesses, large and small, are the lifeblood of the continent’s economy, and making it easier for more to flow between them should be a priority. The data from the report highlights a much-needed transition from cash-based payments but that is just the beginning. There are still various challenges in the payment process that make it difficult for businesses to maximise opportunities to scale their operations. We need to constantly innovate around these challenges to more effectively position African businesses for the growth they need to power economic growth on the continent”.
Duplo notes that the apparent transition from cash-based transactions highlighted in the report represents a major shift in business behaviour, with cash payments historically dominating B2B payments on the continent. The findings of the report also suggest that beyond the clamour for digitised payments, African businesses want payment processes that are effective and efficient, rather than digital payments just for the sake of it.
Kudos to CBN for E-naira initiative. Speed and reliability are guaranteed in B2B and C2B transactions. This will eventually birth total cashless business payment process (BPP).