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Cross-Border Payments: Facilitating Trade in the African Continent

Facilitating trade through cross-border payments unlocks regional economies, positioning individuals and businesses to build wealth seamlessly. Europe, America, and Asia are notable mentions in this regard.

While Africa is not at the same level as these regions, it’s gradually becoming an integrated marketplace as recent developments, such as fintech solutions, cross-border payment systems, and government regulations, facilitate trade in the continent.

Cross-Border Payments Facilitating Trade in the African Continent

This article explores the challenges facing cross-border payments in Africa and how, amidst these challenges, it is facilitating trade in the region.

Challenges Facing Cross-Border Payments in Africa

Cross-border payments in Africa have many challenges, ranging from poor infrastructure to currency volatility, limited financial inclusion, high remittance costs, and more.

Lack of Standardized Infrastructure

The African payment infrastructure is laden with inconsistencies, from technological disparities to regulatory barriers, interoperability issues, cash dependency, etc. These issues hinder the establishment of a standardized cross-border payment infrastructure, making trade among Africans difficult.

Currency Exchange and Volatility

There are 42 different currencies in Africa. This complicates cross-border transactions as businesses deal with currency exchange rate fluctuations and the associated conversion costs. Constant currency fluctuations, as witnessed in many African countries, bring trade uncertainties as they can erode capital easily, limiting a business’s purchasing power.

Regulatory Barriers

Stringent and inconsistent regulations and compliance requirements can affect the smooth flow of cross-border transactions. And this is common in Africa as countries impose strict regulatory frameworks that delay or even discourage transactions.

Limited Financial Inclusion

According to Statista, 45% of the African population remains unbanked as of 2021. With limited access to traditional banking services, individuals and businesses look towards informal and less efficient channels for cross-border transactions or don’t participate in trade at all.

High Remittance Costs

The high cost of cross-border remittance is a huge concern in Africa. The cost of sending or receiving money through traditional banking channels or money transfer operators is exorbitant, which excludes individuals and businesses with lower incomes from trade transactions. It also reduces the value of goods and services received by the paying parties, affecting their ability to upscale in the future.

Cybersecurity Concerns

The increasing reliance on digital cross-border payment methods makes individuals and businesses in the financial system vulnerable to cyber threats and attacks. Inadequate security measures and a lack of awareness about these cybersecurity concerns lead people to financial losses, eroding their trust in digital payment systems. This significantly affects cross-border transactions, reducing trade volume among countries on the continent.

How Cross-Border Payments are Facilitating Trade in Africa

Here are the different ways cross-border payments are facilitating trade in Africa:

  • Improved Accessibility

Cross-border payments enable individuals and businesses in underserved areas to participate in international trade. With mobile money services and other digital cross-border payment services, people can export goods to neighboring countries or even faraway countries and get paid without a formal bank account.

According to Statista, African mobile money users made over 44.9 billion transactions within themselves in 2022, representing an 8 billion increase in transaction volumes from the previous year. This high transaction volume shows the level of cross-border trade between African countries.

  • Transaction Efficiency

The speed and efficiency of digital cross-border payments facilitate trade among African countries. This is one key area where fintech solutions like digital payment gateways, mobile money, etc., are quite useful.

Fintech solutions streamline payment processes and reduce the time and effort required for cross-border transactions. Businesses no longer need to go to banks to pay their suppliers, as they can do so with their mobile phones, facilitating the timely delivery of their goods.

Before now, it took several days for funds sent across African borders to get to the recipient. But with fintech payment solutions like mobile money and digital payment gateways, funds can hit recipient’s accounts in less than 24 hours. This leads to quick payment settlements and facilitates future transactions.

  • Reduced Transaction Costs

With an average transaction cost of 8.9% against the global average of 6.8% in 2020, cross-border payments in Sub-Saharan Africa are expensive for individuals and small businesses involved in international transactions.

Therefore, reducing the cost of cross-border payments among African countries is another way to facilitate trade in the continent. International transactions often incur high transaction fees, especially when seeking forex from traditional banks. However, with digital payment systems, these fees are significantly reduced.

Mobile money is the cheapest instrument for international remittances among all remittance service providers (RSP). The average cost of sending remittances through mobile money was 4.18% in Q2 2023, the lowest compared to bank transfers (6.83%) and cash (6.04%).

  • Currency Harmonization

Unlike their European counterparts, African countries use different currencies, making trade more complex and expensive. Usually, transactions between two African companies require them to settle payments in a third external currency, euros or dollars. This created foreign exchange and liquidity problems and often led to transactions taking days or weeks to be completed.

To rectify this problem, the African Export-Import Bank collaborated with the African Continental Free Trade Area (AfCFTA) to develop the Pan-African and Settlement System (PAPSS), a standardized currency or payment system. With this system, individuals, businesses and governments within the African continent can make cross-border payments without worrying about exchange rates or delayed transactions.

It enables companies to make intra-African trade transactions in their local currencies, which makes it cheaper and ensures faster payment and settlement of the transactions.


The current state of cross-border payments in Africa is a testament to the ongoing transformation. Despite the challenges posed by diverse currencies, regulatory complexities, technological disparities, etc., Africa is making great strides in streamlining payments and fostering financial inclusion.

With the collaboration of regional communities and the advancement of technological solutions, the possibility of a seamlessly interconnected African marketplace becomes more apparent. The achievements in facilitating trade through cross-border payments pave the way for greater economic integration and position Africa as an economic powerhouse on the global stage. See More!

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