A recent Capital YES report, a venture capital company focused on Africa, revealed that the African cross-border payments market, currently estimated at $ 329 in 2025, is expected to reach 1 dollars billion in 2035.
The main engines such as increased regional trade, increasing migration, the penetration of mobile money and Fintech innovation are to reshape the way money crosses borders. However, ineffectures persist, which costs consumers and companies from billions a year. High costs, volatility of currencies, fragmented regulations and limited interoperability continue to hinder progress.
Despite these obstacles, opportunities abound. Africa had 781 million mobile funds recorded in 2022, with $ 837 billion in transactions volumes 66% of world money transactions. Fintech solutions considerably reduce transfer costs, with digital channels with an average of 3.5% compared to the 8 to 12% traditional and allowing almost insufficient transfers.
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SMEs stimulate intra-African trade, taking more and more digital tools to simplify cross-border trade. But deeper structural problems remain:
- The average payment fees on average from 7.4 to 8.3%, the highest worldwide.
- Only 55% of African countries authorize electronic KYC, creating repetitive charges.
- FX liquidity problems and incoherent policies in countries like Nigeria lead $ 5 billion in additional costs per year, driven by offshore compensation and double currency.
Cross -border offices of the main versions in Africa
1. Regulatory reforms – PADS & AFCFTA
The Pan -African payment and regulation system (PASS), launched in 2022, allows instant cross -border payments to local currencies, which has made the need for compensation in dollars and potentially save up to $ 5 billion per year.
At the same time, the field of African continental free trade (AFCTA) strives to harmonize financial systems through Member States, reducing dependence on rapid and foreign banking intermediaries and promoting a more integrated African financial market.
2. Having mobile money
Mobile money is revolutionizing funding in sub -Saharan Africa, now dealing 30% of all SSA payment flows – proved to be $ 16 billion in 2022. With transactions volumes increasing from 22% from one year to the next and shipping mobile funds to 48% per year, these platforms offer considerably transaction costs (1.5% to 3%) Report to traditional banks (7% +), which makes them a more accessible option for cross transfers.
3. Regional migration, trade and urbanization
Intra-African shipments reached $ 20 billion in 2022, highlighting the impact of the increase in regional migration and urbanization. These dynamics feed the corridors of South-South funds, strengthen regional financial links and stimulate the demand for effective and affordable payment solutions.
The growth in intra-African trade also accelerates the adoption of digital payment tools through borders, improving financial inclusion and economic integration.
The report notably revealed that digital transfers have considerably reduced transfer fees from 7.4% to 3% or less, saving migrants from $ 4 to 5 billion per year, cross More affordable border payments. In addition, Papss and API Fintech have the potential to eliminate $ 5 billion In the correspondent’s banking costs, accelerate transactions and lower costs.
With each 1% reduction in payment fees, African families save around $ 6 billion per year, highlighting the immense financial impact of digital innovation in the funding sector.
Key characteristics of Africa Cross -border payments
Low value and high frequency transactions dominate
Transfer of funds, trade of SMEs and informal Payments are the main use cases. The average payment transaction The value in Africa is $ 200 to $ 400, with a 60 to 80 million transactions per month (World Bank, 2023). Informal Cross -border traders generally deal payments between $ 200 and $ 1,000 per transaction, often transgiating multiple Time per week (UNCTAD, 2021).
Fragmented currencies
Africa has more than 40 currencies, at the top at high FX costs and dependence on USD / EUR for the regulations.
Supply dependency of cash flow
Digital adoption increases, but more 80% of transactions remain in cash (World Bank, 2023). Dominant money.
Solid mobile money networks
Africa leads to the penetration of mobile money, With platforms like M-Pesa, Mtn Momo, and Airtel Money Dominant.
Dependence on corresponding banks
Many African banks lack direct cross -border relations, Increase in transaction costs and processing time.
Conclusion
The cross -border payment market in Africa is ready for significant growth, motivated by the increase in digital adoption, Mobile money penetration and Fintech Fintech dominance. The volume of the intra-African Shipments of funds should increase as more Individuals and companies are looking for costs efficient, faster and more accessible Payment solutions.
With the emergence regional payment networks such as As Paps, dependence at Swift The corresponding bank based is likely to decrease, reducing the transaction costs and efficiency.
