The problem with instant cross-border payments in Africa is deeper than technology — central bank executives

Fintechs cannot solve the problem of cross-border payments in Africa because the solution is not tech-based. As far as Kwame Oppong, Director of Fintech and Innovation, Bank of Ghana is concerned, the technological solution already exists, however, the main problem has several layers.

Cross-border transactions and their challenges were a recurring theme on the first day of the Inclusive Fintech Forum in Kigali, Rwanda. From blockchain to cryptocurrencies, several speakers highlighted different solutions that could ease transactions between African countries, yet none have been widely successful.

During a panel discussion titled "Dialogue Between Central Bankers on Digital Money," speakers examined the underlying issues preventing seamless cross-border transactions across the continent.

Why cross-border transactions in Africa remain a challenge 
Technological solutions like the Pan-African Payment and Settlement System (PAPSS) were designed to simplify cross-border transactions within Africa. PAPSS functions similarly to Nigeria’s Inter-Bank Settlement System Plc (NIBSS) but operates on a continental scale. It has a network of 15 central banks, including the Central Bank of Nigeria, the Bank of Ghana, the Reserve Bank of Malawi, and the Central Bank of The Gambia. Additionally, payment processors such as NIBSS, Interswitch, Pesalink, and Kenswitch are integrated into the system.

However, despite its existence since 1993, instant cross-border transactions in Africa remain a major topic at financial forums.

"Infrastructure has never been the problem," Oppong stated. "It is about investment capacity and political will."

Africa’s payment infrastructure is well-developed. In 2021, Nigeria was ranked the sixth most developed real-time payments market globally, according to ACI’s Prime Time for Real-Time report. It also led Africa in real-time transactions, recording 3.7 billion transactions in 2021.

Many other African countries also operate efficient real-time payment systems. Oppong highlighted that Ghana’s instant payment system is interoperable between mobile money wallets and bank accounts, an achievement even some G7 countries struggle with.

Years of real-time payment advancements support Oppong’s argument that infrastructure is not the issue. African governments have access to successful models from which to learn, so why is progress still slow?

The answer lies in the non-technological barriers, which are harder to address.

The challenges beyond technology 

Christian Kajeneri, Director of Payment Systems at the National Bank of Rwanda
According to Christian Kajeneri, Director of Payment Systems at the National Bank of Rwanda, one major issue is foreign exchange (FX) fluctuations. A potential solution is a common market with a single African currency, but efforts toward this goal have repeatedly stalled.

For instance, the Economic Community of West African States (ECOWAS) has been discussing the adoption of a single currency—the eco—for over 35 years. The concept was introduced to reduce dependence on foreign currencies, improve economic stability, and facilitate intra-regional trade. Initially, it was intended for non-CFA franc West African countries, but its scope later expanded to include all ECOWAS members.

Despite gaining momentum in 2019, with West African leaders announcing a 2020 launch date, the plan faced setbacks. Côte d’Ivoire’s President, Alassane Ouattara, even proposed rebranding the CFA franc — used by eight ECOWAS nations — to the eco.

However, Nigeria and other Anglophone countries opposed this move, fearing continued French influence over the currency. As a result, the rollout stalled, and ECOWAS has now pushed the launch to 2027.

The need for agreement and alignment among African countries  
For a truly efficient cross-border payment system, African countries must align on key issues such as Know Your Customer (KYC) standards.

According to Dr. Tumubweinee Twinemanzi, Executive Director of the Payment Systems Directorate at the Bank of Uganda, differences in KYC regulations—some lax, some stringent—create additional hurdles. He emphasised the need for a minimum standard for data protection and privacy across all African countries.

However, beyond KYC, the liquidity of currency pairs is another major challenge. "For example, if we consider cross-border transactions between Uganda and Rwanda, we must ask: To what extent do Rwandans want Ugandan shillings, and to what extent do Ugandans want the Rwandan franc?" he explained. In most currency pairs, one currency is always in higher demand than the other, creating imbalances.

Despite these challenges, some African countries have found ways to facilitate instant cross-border transactions. Oppong revealed that Singapore and Ghana created a Financial Trust Protocol, which enabled seamless cross-border payments between the two nations.

Both countries realized they had certain baseline similarities in their data sets, which made transactions easier," he said. He added that some African countries also share similar data infrastructures, yet they have failed to implement similar systems.While many layers still need to be unpacked, Oppong believes that it is ultimately the responsibility of central banks to develop a framework that existing technologies can integrate into, ensuring that instant cross-border transactions finally become a reality in Africa.

https://techpoint.africa/2025/02/25/cross-border-payments-africa/