Africa's BNPL Surge: How Buy Now, Pay Later is Reshaping Retail for SMEs in 2026
Africa's Buy Now, Pay Later (BNPL) market is rapidly expanding, projected to reach $6.5 billion in 2026. This surge is reshaping retail for SMEs, offering new ways to boost sales and reach customers.
Walk into a mid-size electronics shop in Lagos or Nairobi and ask whether they offer instalment payments. Most owners might still dismiss it as something reserved for large retailers or formal credit institutions. That perception is quickly becoming outdated, and for many, an expensive one.
Buy Now, Pay Later (BNPL) is the fastest-growing payment segment in Africa right now, moving aggressively off e-commerce screens and into physical stores, market stalls, and small merchant operations. The businesses that understand how it works and integrate it will gain a serious competitive edge. Those who dismiss it risk watching customers walk to competitors who do offer it.
The numbers underscore the scale of this shift. Africa's BNPL market is projected to reach $6.5 billion in 2026, growing 25.7% year-on-year, according to a 2023 report by ResearchAndMarkets. This same report forecasts the market to be worth $16.8 billion by 2031, reflecting a compound annual growth rate of 30.5% between 2022 and 2025.
This growth is not theoretical; it is already impacting key African markets. Kenya's BNPL market alone is expected to hit $1.39 billion in 2026, a 24.7% increase from the previous year, and is forecast to reach $3.69 billion by 2031. Similarly, Nigeria's BNPL market is projected to grow 20.6% in 2026 to reach $1.88 billion, climbing to $3.96 billion by 2031. This expansion is driven by mobile money platforms, e-commerce networks, and telecoms companies leveraging existing infrastructure to offer BNPL products.
The core mechanic of BNPL is straightforward: the customer buys something today and pays in instalments over time. Crucially for merchants, under most BNPL models, the merchant receives the full payment upfront. The BNPL provider assumes the credit risk and collects the instalments directly from the customer over the agreed repayment period.
This means BNPL is distinct from a merchant offering credit directly. You, the merchant, are not waiting to be paid or taking on default risk. For example, a customer in Kenya using Safaricom's Faraja through Lipa na M-Pesa can pay for a 20,000 Kenyan shilling product in three instalments, while the merchant receives the full 20,000 shillings immediately. The BNPL provider typically charges the merchant a small percentage fee, usually between 2% and 5%, in exchange for removing the biggest barrier to a sale: the customer not having the full amount available at the point of purchase.
Several key players are driving this adoption across the continent. **Safaricom and EDOMx's Faraja** product in Kenya is particularly significant for SMEs, operating directly within the Lipa na M-Pesa ecosystem. This means any merchant already accepting M-Pesa payments can potentially offer BNPL to their customers. In Nigeria, **CredPal**, which raised $15 million in 2022, has partnered with Jumia to offer instalment payments at checkout, expanding its reach across both online and offline retail. **Lipa Later** has expanded across East Africa (Kenya, Uganda, Rwanda) and into Nigeria, moving beyond general retail into sector-specific financing like healthcare and education, bolstered by a partnership with Mastercard in August 2023. South Africa's **Payflex** has integrated into major online retailers and physical stores, making BNPL a standard payment option. Platforms like **M-Kopa** and **SpotIt** in East Africa extend instalment financing to essential assets like smartphones and solar systems, using a pay-as-you-go model that empowers customers to build assets without upfront capital.
For SME owners, the practical implication is clear: BNPL can significantly raise average transaction values and reduce abandoned sales. A customer considering a 15,000 shilling purchase with only 5,000 in their wallet today might walk away empty-handed without BNPL. With the option to spread payments over three months, that customer is more likely to complete the purchase immediately. Beyond increased basket size, BNPL also attracts a new category of customer, particularly underbanked consumers who lack credit cards but have mobile money accounts and steady, albeit irregular, incomes. This is crucial in Sub-Saharan Africa, where 49% of formal SMEs are unserved or underserved by financial institutions.
The rapid growth of BNPL has naturally prompted regulatory attention. Regulatory bodies across Africa are extending existing consumer credit and digital lending frameworks to cover BNPL products, focusing on licensing requirements, disclosure obligations, and affordability assessments. In Kenya, the Central Bank of Kenya's Digital Credit Providers Regulations, 2022, now require all digital loan providers, including many BNPL platforms, to obtain a licence. Nigeria's Federal Competition and Consumer Protection Commission (FCCPC) has brought digital money lenders, which encompass many BNPL providers, under its Guidelines for Digital Money Lenders, 2022. Similarly, Egypt's Financial Regulatory Authority (FRA) introduced its Fintech Law No. 5 of 2022, establishing licensing requirements for various fintech activities, including digital lending.
This regulatory shift is leading to market consolidation, as smaller, undercapitalised BNPL providers struggle to meet the new requirements. The platforms that succeed will be well-capitalised, often with bank partnerships, which bodes well for merchants as these providers will be more reliable and better integrated with mainstream payment infrastructure.
For merchants in markets like Kenya, Nigeria, South Africa, Uganda, and Rwanda, getting started with BNPL is becoming a strategic imperative. If you accept M-Pesa payments in Kenya, inquire about Faraja integration for your merchant account. In Nigeria, contact CredPal or Carbon for merchant onboarding, as both offer dedicated programmes and integration with existing POS or e-commerce setups. South Africa's Payflex provides an onboarding process for SME merchants, with relatively quick integration for both online and physical retail. In Uganda and Rwanda, Lipa Later has expanded its merchant network significantly, including options for healthcare and education sectors. Ensure your POS or business management system can record BNPL transactions separately for accurate cash flow forecasting and tax records.
BNPL is not a trend that African retail and service businesses can afford to ignore. It is rapidly becoming a default payment option, much like mobile money did years ago – gradually, then suddenly. The market is growing at 25.7% per year and is projected to more than double by 2031. The necessary infrastructure is already live within the payment platforms many businesses use, and customers are ready and willing to use BNPL where it is offered. The critical question for every African merchant in 2026 is not whether to get involved with BNPL, but how quickly they can get set up before their competitors do.
References
* ResearchAndMarkets / GlobeNewswire, 'Kenya Buy Now Pay Later Business Report 2026', February 2026
* Ecofin Agency, 'Africa's Buy Now, Pay Later Market to Triple to $16.8 Billion by 2031'
* FintechFutures, 'Africa Buy Now Pay Later Market Report 2025', March 2025
* Safaricom / EDOMx, Faraja BNPL product documentation
* Mastercard press release, Lipa Later partnership, August 2023
* Mordor Intelligence, 'Middle East and Africa Buy Now Pay Later Services Market' (2025 to 2030)
