CrowdLending (Business) - South Africa

South Africa

Highlights

The total transaction value in the Crowdlending (Business) market market in South Africa is expected to reach US$2.90m in 2024.
When looking at a global comparison, it is evident that the highest transaction value is anticipated China (US$16bn in 2024).
South Africa's CrowdLending market in Capital Raising is witnessing a surge in investor interest, fueled by a growing appetite for diverse investment opportunities.

Key regions:

Market definitionIn-Scope/Out-of-scopeMarket structureReportsMethodology

The CrowdLending (Business) market in South Africa has been experiencing significant growth in recent years.

Customer preferences: South African businesses are increasingly turning to crowd lending as a source of financing due to the ease and convenience it offers. This alternative form of lending allows businesses to access funds quickly and efficiently, without the need for traditional financial institutions. Additionally, crowd lending platforms often offer competitive interest rates and flexible repayment terms, which are attractive to businesses looking for affordable and customizable financing options.

Trends in the market: One of the key trends in the South African crowd lending market is the rise of peer-to-peer lending platforms. These platforms connect individual lenders directly with businesses in need of funding, cutting out the middleman and streamlining the lending process. This trend has gained popularity due to the transparency and simplicity it offers, as well as the potential for higher returns for lenders. Another trend in the market is the increasing adoption of crowd lending by small and medium-sized enterprises (SMEs). These businesses often face challenges when trying to secure financing from traditional banks, making crowd lending an attractive alternative. The flexibility and accessibility of crowd lending platforms make them well-suited for the unique financing needs of SMEs.

Local special circumstances: South Africa has a vibrant entrepreneurial ecosystem, with a growing number of startups and small businesses seeking funding. However, traditional financing options are often limited for these businesses, leading them to explore alternative sources of funding such as crowd lending. The emergence of crowd lending platforms in South Africa has provided a much-needed solution for these businesses, enabling them to access the capital they need to grow and thrive.

Underlying macroeconomic factors: The growth of the crowd lending market in South Africa can be attributed to several underlying macroeconomic factors. Firstly, the country has a relatively high interest rate environment, which has made traditional bank loans more expensive for businesses. Crowd lending platforms, on the other hand, often offer more competitive interest rates, making them an attractive financing option. Additionally, South Africa has a large unbanked population, with many individuals and businesses lacking access to traditional financial services. Crowd lending platforms have helped bridge this gap by providing an alternative source of financing that is accessible to a wider range of borrowers. Furthermore, the digital revolution has played a significant role in the development of the crowd lending market in South Africa. The widespread adoption of smartphones and internet connectivity has made it easier for businesses and lenders to connect and transact online. This has fueled the growth of crowd lending platforms, which operate predominantly in the digital space. In conclusion, the CrowdLending (Business) market in South Africa is experiencing rapid growth due to customer preferences for easy and convenient financing options, as well as the rise of peer-to-peer lending platforms. The local special circumstances of a vibrant entrepreneurial ecosystem and limited traditional financing options for small businesses have also contributed to the market's development. Underlying macroeconomic factors such as high interest rates, a large unbanked population, and the digital revolution have further fueled the growth of the crowd lending market in South Africa.

Data coverage:

The data encompasses B2C enterprises. Figures are based on transaction values / revenues / assets under management and user data of relevant services and products offered within the FinTech market.

Modeling approach / Market size:

Market sizes are determined through a combined top-down and bottom-up approach, building on a specific rationale for each market segment. As a basis for evaluating markets, we use annual financial reports of key players, industry reports, third-party reports, publicly available databases, and survey results from primary research (e.g., the Statista Global Consumer Survey). In addition, we use relevant key market indicators and data from country-specific associations, such as GDP, consumer spending, population, internet penetration, smartphone penetration, credit card penetration, and online banking penetration. This data helps us estimate the market size for each country individually.

Forecasts:

In our forecasts, we apply diverse forecasting techniques. The selection of forecasting techniques is based on the behavior of the relevant market. For example, the S-curve function and exponential trend smoothing are well suited for forecasting digital products and services due to the non-linear growth of technology adoption.

Additional notes:

The market is updated twice a year in case market dynamics change. The impact of the COVID-19 pandemic and the Russia-Ukraine war is considered at a country-specific level.