Market structure can make it more difficult for entrants to challenge incumbents, leading to or reinforcing existing lack of access to DFS. One type of structure-related issue are sunk costs, which are expenses or investments that cannot be recovered or avoided even if a firm exits a market1. These disbursements, having already been made by incumbents in a previous moment, can pose a barrier for new entrants to compete. Economies of scale, which are the smaller unitary costs a firm face the higher the production volume, tend to favor large companies, representing another difficulty for small and medium companies trying to enter a market. By becoming dominant, such enterprises might become a challenge even for competition authorities, which may lack enough resources and clout to face them in administrative or legal confrontations. This imbalance is particularly pronounced in Africa, where government budgets are tight and almost 45% of countries do not have a competition authority2, while the African jurisdictions formally equipped with a competition agency usually face capacity constraints.
1. Soursourian, M. and A. Plaitakis (2019), “Fair Play: Ensuring Competition in Digital Financial Services”, CGAP, Washington, DC, https://www.cgap.org/research/publication/fair-play-ensuring-competition-in-digital-financial-services (accessed on 30 August 2025).
2. Wang’ombe Kariuki, R. (2024), Digital Platforms and Competition Policy in the African Continental Free Trade Area Reflections on the development of a proposed model framework for competition in the digital economy under the AfCFTA Protocol on Competition Policy.
