Inclusive instant payment systems experts and advocates, AfricaNenda Foundation, is working with the African Association of Central Banks (AACB) under the auspices of the African Union to develop the framework for what a continent-wide seamless inclusive cross-border payment system for Africa should look like.
This initiative is intended to address all the hurdles that have for years impeded the establishment of a continent-wide cross-border payment system, and set the key stakeholders on a path to building one for Africa.
Currently, the mainly identified hurdles to a seamless continent-wide cross-border payments are regulatory fragmentations, differences in operational standards, and challenges with foreign exchange and its relative cost to the continent. Those are the challenges AfricaNenda’s frameworks document is seeking to address.
Also Read: Regulatory harmonization critical to cross-border payments in Africa – AfricaNenda
Deputy Chief Executive of AfricaNenda Foundation, Sabine Mensah, disclosed this to journalists drawn from East and West Africa for a two-day training on Inclusive Instant Payment Systems, Gender and Regulatory Harmonization in Abidjan, Cote d’Ivoire.
The media training assembled journalists from Ghana, Rwanda, Kenya, Nigeria, Liberia, Burkina Faso, Cote d’Ivoire, Togo, Cameroun and Senegal.
In her presentation, Sabine Mensah noted that AfricaNenda has, over the last two years, worked with various stakeholders to developed a framework for regulatory harmonization across the continent, and the report was laid before the AACB at a symposium in Cameroun last year.
In what she described a winning engagement, she said central bank governors have finally agreed that the regulatory harmonization agenda in the report will be prioritized by the AACB’s Taskforce on Payment Integration to support the march towards achieving seamless cross-border payments in Africa.
“In terms of where we are today – we have done a feasibility study on regulatory harmonization in Africa – the different challenges – where there needs to be harmonization and potentially what can be prioritized for quick wins to be able to fast-track this agenda,” she said.
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As part of the process, AfricaNenda is also engaging the private sector players to understand what constitutes challenges to cross-border payments from their perspective, while also engaging with the various regional blocks on the continent to properly understand each of their unique challenges and how to address them in the bigger picture.
Regarding the benefits of a continent-wide inclusive cross-border payment system for the peoples of Africa, Sabine Mensah said when that is achieved, it would drive financial inclusion by digitally connecting all payment platform types on the continent – banks, mobile money wallets, merchant wallet and other digital wallets, to ensure that all individuals and all business are able to transfer money across borders seamlessly and affordably.
“It would mean that you can send money from Ghana to your relative in Nigeria instantly. For the millions of MSMEs in Africa it means cross-border traders in one country can send money to suppliers in other countries instantly – and that will enhance the capacity of traders to serve consumers beyond their country borders, which is what the AfCFTA is all about.
“If we are able to create regulatory harmony to drive cross-border payment we will be enhancing African economies by achieving much higher intra-Africa trade,” she said.
Speaking of intra-Africa trade, it is currently estimated to stand at 15%, compared to the 60% intra-European trade.
Sabine Mensah believes that an efficient digital, instant and inclusive cross-border payment system is the panacea for moving intra-Africa trade from the current low rate of 15% to a much higher level, with great benefits for the continent’s GDP and economic development.
The cost of doing nothing
Meanwhile, if nothing is done about the status quo, Africa will continue to bleed billions of dollars annually in transfer cost due to foreign exchange differentials and the regulatory fragmentations, which come with their own cost lines in every country.
The World Bank estimates that every year, Africa records about US$100 billion in international remittances, and for every US$200 sent, there is a seven to eight per cent transfer cost in most cases. Cumulatively, the continent is losing an estimated US$5 billion in transfer fees.
The Sustainable Development Goals proposes a maximum of 3% transfer fees, which will reduce the cost burden drastically and save Africa the much needed funds for its development.
Sabine Mensah believes that the transfer cost reduction can be achieved with the proposed continent-wide inclusive instant payment system, which eliminates the exchange rate related cost, as well as the costs occasioned by the different regulatory systems in the various countries.
She therefore urged the journalists at the two-day training workshop to lead the advocacy for the various regulators in the financial, data protection, identification, cybersecurity, taxation and other digital public infrastructure in African countries to begin to see the need to harmonize regulations for the benefit of the continent.
Meanwhile, AfricaNenda is getting ready to launch its 2026 State of Inclusive Instant Payment Systems (SIIPS) Africa Report later this years. Per the highlights of the report, it captures 36 instant payment systems across the continent, which have reached various levels of inclusivity. But Nigeria’s payment system is still the only one on the continent, which has reached the mature level.
Last year, the CEO of Ghana Interbank Payments and Settlements Systems (GhIPSS) Clara B. Arthur made a declaration at the launch of the SIIPS Africa Report in Eswatini, that GhIPSS will take the country’s payment systems to the mature level before the launch of this year’s report. That is something to look forward to in the next four months, maximum.
