The Credit Promise That Hasn’t Landed: Why BNPL Is Struggling to Scale in West Africa

The pitch has always been compelling; millions of consumers across West Africa are underserved by traditional banks, disposable income is squeezed, and the desire to own a smartphone, pay school fees, or furnish a home hasn’t dimmed. Buy Now Pay Later( BNPL) arrived looking like an obvious bridge between demand and purchasing power. Several years on, the gap between that promise and the operational reality is proving harder to close than anyone anticipated.

Nigeria’s BNPL market is projected to grow from roughly $1.42 billion in 2024 to $2.61 billion by 2030, according to EnterpriseNGR’s State of Enterprise Report. At the continental level, Africa’s BNPL sector is forecast to expand from $5.2 billion in 2025 to approximately $16.8 billion by 2031, at a compound annual growth rate of about 20%. The headline numbers look encouraging. But headline numbers often obscure the friction beneath them, and in West Africa, there is quite a lot of it.

The Credit Infrastructure Problem

BNPL, at its core, is a lending product. It works best when a provider can quickly assess whether someone is likely to repay and when there are meaningful consequences if they don’t. West Africa lacks both at scale.

Nigeria’s interest rate stands at 27.5%, which raises the cost of capital for anyone in the lending business and squeezes the margin BNPL providers depend on. More structurally, credit bureaus in the region remain underdeveloped and sparsely populated. Most consumers have no formal credit history. A significant portion of economic activity that involves trade, income, and savings still runs through informal channels that leave no data trail that a lender can read.

Some providers have responded by building proprietary scoring systems. Platforms like Zilla and CredPal score users based on income and bank transaction data, and others require upfront deposits to reduce exposure. These are legitimate workarounds, but they are not substitutes for shared credit infrastructure. When lenders don’t share data about customer loans, delinquent borrowers benefit from that information asymmetry, cycling through multiple BNPL platforms simultaneously with no single provider seeing the full picture.

This is not a uniquely West African problem. Research on digital lending in Kenya found default rates for small-ticket loans reaching 83%, with broader segments defaulting at up to 40% in 2024. The same structural weakness of thin credit data and weak enforcement mechanisms runs across the region.

The Merchant Side Is Thin Too

Consumer BNPL demand is only half the equation. The other half is merchant adoption, and this is where the numbers become sobering. CredPal, one of Nigeria’s earliest BNPL pioneers, reported 20,000 merchant sign-ups but only around 600 monthly active merchants at the time of its 2022 fundraise, a ratio that illustrates how hard it is to convert interest into consistent usage.

West Africa’s retail landscape is overwhelmingly informal. Street vendors, small roadside shops, and mobile traders account for the majority of commerce in most cities. These merchants run on cash. They have limited digital infrastructure, often no bank account in good standing, and no appetite for the compliance requirements that formal BNPL integration typically demands. Embedding a checkout solution into that environment is a different engineering challenge than building a plugin for an e-commerce site.

Nigeria’s cybercrime burden accounts for 58% of West Africa’s regional losses, approximately $500 million annually, and fraud risk remains a serious drag on both merchant and consumer confidence in digital financial products. For a sector whose entire model rests on trust, this is not a peripheral concern.

Regulation Has Not Kept Pace

In Kenya, the Business Laws (Amendment) Act 2024 now requires all non-deposit-taking credit providers, including BNPL platforms, to obtain licenses from the Central Bank of Kenya. Closer regulatory scrutiny is probably inevitable across the continent. In West Africa, the regulatory framework for BNPL remains unclear in most markets.

That ambiguity cuts both ways. On one hand, it has allowed providers to experiment without the compliance overhead that formal licensing brings. On the other hand, the absence of clear rules has slowed institutional partnerships, made it harder to attract patient capital, and left consumers with limited recourse when things go wrong. The CBN’s Policy Insight Series 2025 signals a deliberate shift toward structured fintech regulation, a move welcomed by investors but which will introduce new compliance costs for smaller BNPL operators who have been operating in the grey.

For Francophone West African countries like Côte d’Ivoire, Senegal, and Mali, the ECOWAS-wide regulatory landscape adds another layer of complexity. Digital lending rules vary significantly, and regulatory fragmentation across the region can account for 15 to 30 percent of revenues in compliance costs for cross-border operators. For a BNPL startup operating on thin margins, that figure is difficult to absorb.

The Macroeconomic Drag

None of this plays out in a vacuum. Nigeria’s inflation hit 34.8% in 2024, and while it has moderated somewhat since, the naira’s volatility has made the economics of debt-funded lending genuinely difficult. When local currency depreciates sharply, the real cost of dollar-denominated debt facilities rises faster than a provider can reprice its products. Several fintech lenders operating in Nigeria have had to pull back product offerings or raise rates to compensate, neither of which improves consumer uptake.

Inflation also changes consumer behaviour in ways that complicate the BNPL model. As one analyst noted at a BusinessDay credit financing panel, demand for BNPL is growing partly because prices of desired assets rise faster than Nigerians can save. That is a reasonable observation, but it also means borrowers are stretching further. Default risk tends to rise with it.

What Has Worked, and Where Things Are Headed

Not everything is stalled. Jumia’s 2024 partnership with CredPal and Easybuy to offer instalment payments at checkout represents the kind of embedded BNPL integration that works, while attaching credit to an existing transaction moment rather than asking consumers to seek it out separately. The model lets merchants receive funds upfront while the BNPL provider takes on the repayment risk. Fintechs are also beginning to use alternative data like mobile usage patterns, transaction histories, and social signals to build credit scores for people without formal financial records. This is a meaningful step toward solving the foundational data problem.

The path to scale in West Africa is not impossible. It is just longer and more expensive than the initial product roadmaps assumed. BNPL providers that survive the next phase will likely be those that have built deep merchant networks in specific verticals across electronics, healthcare, and education rather than chasing the mass market with undifferentiated credit. They will need balance sheets strong enough to absorb local currency risk. And they will need to invest in credit bureau contributions that improve the broader ecosystem, even when short-term competitive logic suggests otherwise.

The demand is real. The market will grow. But the gap between projections and reality in West African BNPL is largely a story about infrastructure: credit data, regulatory clarity, merchant density, and macroeconomic stability rather than a failure of consumer appetite. Until that infrastructure matures, providers will keep running hard to stay in one place.