We read Finextra's report on embedded finance so you don't have to ??

Embedded finance is transforming financial services globally, and Africa is no exception.

If you want a better understanding of how this fast-growing sector is shaping the continent’s economic future, the Finextra report, sponsored by Kora , on embedded finance in Africa 2025 is a must-read.

But if you’re short on time, we’ve pulled out some insights for you because we are lovely people ??

Why is embedded finance an important sector in Africa?

Embedded finance refers to the seamless integration of financial services—such as payments, lending, and insurance—into non-financial platforms like e-commerce sites, ride-hailing apps, and marketplaces.

For Africa, a continent with a young, tech-savvy population and a rapidly growing digital economy, embedded finance presents an opportunity to:

? Expand financial inclusion

? Drive economic growth

? Simplify transactions for businesses and consumers

With mobile phones already acting as de facto banks for millions of Africans, embedded finance fits naturally into the way people and businesses engage with money.

Growth drivers for embedded finance in Africa

There are several factors that make Africa uniquely positioned for embedded finance adoption:

1. ?? High mobile penetration: Most Africans access financial services via their phones.
2. ?? Digital-first population: Young consumers embrace new technology and digital apps and products.
3. ?? Affordable internet & data: Connectivity is increasing across urban and rural areas. Data is still an expensive commodity but more ISPs are offering affordable daily and weekly data rates to their customers.
4. ?? Maturing financial ecosystems: Unlike Europe or the U.S., Africa isn’t burdened by outdated banking systems, making it ripe for financial innovation.

The potential of embedded finance across multiple sectors

Embedded finance has the power to shape multiple sectors, and here are some of the ways:

1. ??? Advocate for financial inclusion: Millions of unbanked and under-banked Africans can access credit, insurance, and payments directly within digital platforms they already use.
2. ??? Boosting e-commerce growth: With embedded Buy Now, Pay Later (BNPL) options, more customers can afford online purchases. Africa’s e-commerce market is projected to hit $56 billion by 2026.
3. ??? Streamline cross-border payments: Businesses can process faster, cheaper, and more transparent transactions across different African countries.
4. ?? Enable personalised finance: By leveraging data and AI, platforms can offer tailored loans, insurance, and savings options suited to individual customer needs.

Challenges that come with scaling embedded finance in Africa

While the opportunities are vast, barriers to widespread adoption remain:

1. Reliability: Businesses need stable, localised solutions that support multiple currencies and payment methods.
2. Data privacy & safety: Protecting user data is critical, especially as cyber threats increase. SMEs with limited cybersecurity infrastructure are particularly vulnerable.
3. High implementation costs: Implementing embedded finance can be expensive, especially for small businesses.
4. Low-trust environment: Many Africans still prefer traditional banking institutions. A hybrid digital-physical model could bridge this trust gap.
5. Stricter regulations – Governments need to develop clear policies that encourage innovation without compromising consumer protection.
6. Infrastructure gaps – Many rural areas lack reliable internet access, making financial service delivery challenging.
7. Fragmented systems – Different payment platforms need to work together seamlessly for transactions to be frictionless.
8. Verified identity challenges – Millions of Africans lack formal identification, making onboarding difficult for financial services.

Real-team applications of embedded finance in Africa

Africa is already leveraging embedded finance across multiple industries:

1. Mobile money: Platforms like M-Pesa are laying the foundation for embedded payments.
2. SME funding: Finance startups like Salad Africa provide lending infrastructure services to support SME financing and growth in Africa
3. E-commerce: BNPL and embedded payments (wallet, card, bank transfer, and USSD) are making online shopping more accessible.
4. Agri-financing: Agro-focused businesses are providing digital wallets, insurance, and supply chain financing for farmers.
5. Retail and hospitality: Embedded lending helps businesses manage inventory, invoicing, variable and fixed costs, and cash flow.
6. Social media & P2P payments: Digital platforms are enabling instant money transfers within apps. For example, in select countries, Whatsapp users can send and receive payments in the app.

In conclusion...

As mobile banking and digital adoption continue to expand, Africa has the potential to become a global leader in embedded finance. The key? Overcoming regulatory, infrastructure, and trust challenges while promoting partnerships between fintechs, banks and financial institutions, regulators, and SMEs.

Who needs to step up to the plate?

1. ?????? Finance startups and and other infrastructure providers that will bridge the gap between financial institutions, digital platforms, and SME merchants
2. ?? Banks and financial institutions that will provide the capital needed to finance SME merchants
3. ?? Regulators that will design flexible and innovation-friendly policies