Rising markets across Latin America, Africa, and Asia are where the growth is

In 2024, 109 million people worldwide will join the consumer class and 70% will come from these regions, according to the World Data Lab. Over the next decade, Africa will add more consumer spending than Europe, India is to become the world's third-largest economy, and Latin America will reach nearly universal internet penetration. 

There is a clear demographic reason for this trend: rising economies have a young and growing population (in contrast with developed regions). Africa will be home to the largest adult population worldwide by 2030, with over 1 billion working-age people. India is expected to reach the same threshold by 2025, surpassing China.

The effect of rising income should not be forgotten, as well: in Latin America, for example, the higher income level will be twice as important as the number of new consumers through 2030, per the World Data Lab. This means that most of the new spending in the region will come from actual consumers, who are seeing their economic status improving gradually over time.

Digitization is leveling up the game in rising markets, turning them into substantial opportunities for digital enterprises

In addition to the demographic and economic push, rising economies greatly benefit from digitization. As internet access becomes more widespread, consumers and businesses get digitized, disrupting traditional industries and lowering entry barriers both for companies and users.

For example: while owning a car is cost-prohibitive for most people in developing countries,  ride-hailing services are an affordable alternative. Similarly, if a software license is expensive for most businesses, pay-as-you-go for a SaaS subscription is a reasonable option. 

This has unlocked previously priced-out consumers and spurred economic growth. In rising markets, it leveled the playing field, turning them into as great opportunities as developed economies.

That phenomenon is what a McKinsey report calls "access curves": instead of the traditional S-shaped curves, where access depends on income, we see industries with more flattened curves, where consumers of different income levels have access to the same products or services.

"More people, even on lower incomes, can afford certain goods and services. We call these new curves 'access curves' and see them already emerging in categories such as mobility, banking, and gaming," reads the report.

"More people, even on lower incomes, can afford certain goods and services. We call these new curves 'access curves' and see them already emerging in categories such as mobility, banking, and gaming"

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In other words, digital products and services are cheaper and more widely accessible for consumers in rising markets when compared to other industries which turns these markets into enormous opportunities for growth.

Rising markets are nurturing their own digital titans — which are increasingly competing with global companies

For global companies, rising markets represent an enormous growth opportunity, especially for digital businesses. Digital industries across the world have reached a plateau, with high levels of competition and user penetration. Most of them grow only around 2% per year, in a typical scenario of market saturation. The one exception is rising markets.

While digital commerce is growing by 13% per year in developed countries, in rising markets, sales are expanding at a 20% pace, according to Statista. By 2026, Latin America alone will reach nearly USD 950 billion in volume, while India will represent about 30% of that, with USD 276 billion in online sales, per PCMI. It’s no wonder that companies like Spotify and Netflix are focusing on emerging markets for growth. In the case of Spotify, these economies already represent 52% of their user base. 

At the same time, local digital trailblazers are emerging, seizing local opportunities, and expanding to become regional and even global titans. Examples of these companies include the fast-fashion retailer SHEIN, the e-commerce behemoth MercadoLibre, the Brazil-based digital bank Nubank, and the Chinese international sensation known as TikTok. 

"Today, not only are entrepreneurs in Buenos Aires, Lagos, and Jakarta building businesses that create huge economic opportunity and value, they’re also competing directly with Silicon Valley for users and growth in these markets," reads a recent report from Rest of World about companies across emerging economies that are wrestling with global competition in their home markets.

The penetration rate and usage numbers for some of these companies — 99% local market share, 50% regional market share, over USD 1 trillion in transactions, 50 million monthly active users, and presence in more than 40 countries, to name a few — are evidence of the tremendous opportunity in rising markets.

International players are rising to the occasion as cross-border transactions grow

Judging by the numbers, there is room for everyone. International purchases make up a significant share of digital commerce in rising economies, especially in nascent markets in Latin America — where cross-border transactions can reach up to 74% of total online purchases, per PCMI (Payments and Commerce Market Intelligence). Cross-border transactions are also relevant in major economies such as Mexico, Chile, and South Africa, with about 20% share.

It is no coincidence that cross-border volume is becoming increasingly important for Visa and Mastercard, which are reporting solid growth in international transactions in Latin America, the Middle East, Central Europe, and Africa. 

"Latin America, CEMEA, most of these regions are growing at or around 20% or more. So we feel good about what's happening there," said Visa's CEO Ryan McInerney, in the company's Q4 2023 earnings call.

Digital payments are at the center of this transformation, bringing financial inclusion and economic growth

Digital payments are at the center of this transformation, used by over half of the population in rising markets and helping to bring financial inclusion and economic growth. Over the last decade, regions such as Latin America, Africa, and Asia have raised their adoption of digital payments by up to 25 percentage points, according to the World Bank Global Findex.

These payments go beyond credit cards (which are becoming increasingly available) to include instant payments, digital wallets, account-to-account transfers, and contactless payments. Pix in Brazil, UPI and RuPay in India, mobile money in Africa, PSE in Colombia, and Mercado Pago in Latin America are examples of digital payments that took their markets by storm, bringing financial and digital inclusion.

Digital payments reduce transaction costs, help users manage cash flow, and offer a more seamless consumer experience. For businesses, they facilitate faster and more efficient transactions, allow more client reach, and, in some cases, even help them to leave the informal economy. As a result, digital payments can lead to an increase in employment, income, and GDP.

“Digitizing things reduces overheads massively, and it does it in a pro-equity way,” tech magnate and philanthropist Bill Gates recently told the Financial Times after a trip to Nigeria, where he advocated for the adoption of digital public infrastructure. 

In Africa, for example, mobile money — a financial service that allows users to pay and exchange values through a cellphone, with no need for an internet connection or a bank account — has over 600 million registered accounts and almost universal penetration in countries like Kenya. Not only did mobile money bring financial inclusion, allowing millions of people to have their first financial account, but a new GSMA study showed that it added almost USD 600 billion to GDP in the countries where it was available over the last decade. This represented a 1.5% increase in the continent between 2013 and 2022. For Sub-Saharan Africa, the contribution to the GDP was even more significant, reaching 3.7%.

India followed a similar path with its UPI (Unified Payment Interface), the instant, mobile-based payment system launched in 2016 — which now accounts for over 70% of the country's digital transactions. A 2023 study found that UPI adoption helped to increase levels of income and business activities across India, especially "in financially less developed regions of the country."

"A move towards digital payment system affects economic outcomes in a positive manner."

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Digital payments are intimately connected to economic growth and consumption in rising markets — and are therefore critical in order for companies to seize the full potential of these markets.

Yes, there are challenges but navigating them with a local partner goes a long way

Rising markets' local challenges and specificities are as significant as their opportunities. Despite the advances in financial access, internet penetration, and income level, there are many issues that remain to be addressed.

Recently, economic forecasts point to a deceleration in growth for Africa, Latin America, and South Asia due to issues including political instability, uncertainty in the global economy, energy and transportation bottlenecks, and persistent inequality. 

Rising costs affect consumer spending across Latin America, while consumer indebtedness is a growing concern in countries where financial access has been rapidly improving. While internet penetration is rising, usage gaps remain an issue: 38% of the global population is not connected to the mobile internet despite having access, per GSMA — this number reaches 52% in South Asia and 59% in Sub-Saharan Africa. 

Nevertheless, growth prospects are still optimistic compared to developed countries: The South Asian economy is expected to expand by 5.6% per year through 2025; Latin America will grow by 2.3% and 2.6%, respectively, in 2024 and 2025; and East and West African countries will reach around 5% growth in the following years, per the World Bank.

More importantly, the digital economy is acting as a driver for inclusion and economic prosperity. "Expanding digital connectivity, combined with complementary policies, offers the possibilities to create more dynamic and inclusive societies," says a recent World Bank report on Latin America.

Navigating challenges with a local partner is critical for global companies wanting to seize the rising markets' opportunities. While digital literacy and data affordability improve across these regions, having a knowledgeable partner will help businesses thrive during political or economic instability and better address local consumption patterns and trends.

In the end, digital payments and businesses are not only pushing economic growth, but also digital citizenship. Being able to access products and services online, either a digital ID, a financial account, access to online courses, or transportation, has enabled millions of people to thrive and be economically included. It is a challenge well worth the effort.

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Africa, a continent poised for digital growth