Africa has one of the most dynamic yet fragmented financial landscapes in the world. With more than 50 countries, dozens of currencies, and diverse regulatory systems, cross-border payments remain a major challenge across the continent. Despite rapid growth in fintech and mobile money, many businesses still experience failed or delayed transactions. Understanding why these failures happen — and how innovators are solving them — offers valuable lessons for global payment systems.
The Context: A Continent of Diverse Systems
Africa’s economies are highly interconnected through trade, remittances, and digital commerce. Yet, banking infrastructure varies widely.
- South Africa, Nigeria, Egypt, and Kenya have advanced banking systems with electronic clearing and strong regulatory oversight.
- Smaller economies depend on limited correspondent banking links or manual settlement processes.
- Local currencies often lack liquidity outside their home countries.
The result is a patchwork of systems that do not easily communicate with one another. Payments between two African countries often travel through intermediaries in Europe or the United States, increasing cost and failure risk.
Common Causes of Cross-Border Payment Failures
1. Currency and Liquidity Constraints
Many African currencies are non-convertible outside their borders. Sending money from Ghana to Zambia, for example, may require conversion to USD, transfer through a correspondent bank, and then conversion back to local currency. Each conversion adds cost and risk of failure if liquidity is low.
Some central banks impose foreign exchange limits, delaying transfers until approval is granted — a common issue in Nigeria and Ethiopia.
2. Poor Integration Between Payment Networks
Most African countries maintain independent domestic payment systems such as:
- NIBSS Instant Payment (NIP) in Nigeria
- PesaLink in Kenya
- RTGS systems in South Africa and Ghana
These networks operate efficiently within national borders but are rarely connected regionally. Without interoperability, payments must pass through international SWIFT routes, even for neighboring countries, increasing settlement time and points of failure.
3. Compliance and Documentation Delays
Regulatory frameworks differ across the continent. Each country has its own AML, CFT, and KYC rules. Missing or mismatched documentation can cause payments to be frozen mid-route.
For instance, a transaction approved in South Africa may be held for additional review in Kenya due to differing reporting thresholds or documentation requirements. These checks, while necessary, often rely on manual review, prolonging the process.
4. Inconsistent Infrastructure and Outages
Technical failures are another factor. Some regional payment switches or banking systems experience downtime, delaying transaction confirmation. Limited connectivity in rural areas also interrupts mobile payment processing, particularly for remittance flows.
5. Dependence on Correspondent Banking
A large portion of African cross-border payments still flow through a small number of correspondent banks. De-risking by global institutions has led to closure of correspondent relationships, especially for smaller African banks. This limits routing options and increases the likelihood of payment rejection when liquidity or compliance issues arise.
Real-World Example: The West African Trade Corridor
A Ghanaian exporter selling goods to Côte d’Ivoire faced repeated delays in receiving payments. The buyer’s bank could only send USD transfers via an intermediary in London.
- The payment passed through three banks.
- Currency conversion occurred twice (USD–EUR–GHS).
- Settlement took five business days.
- One transfer was rejected due to an invalid intermediary SWIFT code.
This example illustrates how a transaction between two neighboring countries can depend on third-party banks thousands of kilometers away.
Lessons from Failure: What Can Be Improved
Lesson 1: Regional Payment Integration
Regional efforts like the Pan-African Payment and Settlement System (PAPSS) are addressing fragmentation. Backed by the African Export-Import Bank (Afreximbank), PAPSS enables instant payments between African countries using local currencies.
By settling regionally, PAPSS reduces reliance on USD corridors and eliminates multiple conversion steps — directly lowering the risk of payment failure.
Lesson 2: Local Liquidity Management
Building regional liquidity pools allows payment providers to hold reserves in major African currencies (NGN, KES, ZAR, GHS). This ensures that payments can be processed instantly, without waiting for external FX availability.
Fintech companies are now creating multi-currency wallets that provide instant conversion between African currencies using algorithmic rate matching.
Lesson 3: Standardized Compliance Protocols
Cross-border success depends on harmonizing KYC and AML standards across African markets. Initiatives such as the African Continental Free Trade Area (AfCFTA) and Financial Action Task Force (FATF) regional bodies are promoting shared compliance frameworks.
Unified standards mean less manual review and fewer rejections due to mismatched documentation.
Lesson 4: Fintech and Mobile Money Collaboration
Mobile money systems dominate local payments in Africa but historically lacked cross-border capability. Companies like M-Pesa, Airtel Money, and MTN Mobile Money are now partnering with fintech providers to enable cross-network remittances.
For example, users in Kenya can now send funds directly to Uganda or Rwanda through integrated APIs — a model that bypasses traditional banking barriers and drastically reduces failure rates.
Lesson 5: Infrastructure Modernization
Improving digital infrastructure is critical. Upgrading data centers, increasing internet reliability, and standardizing messaging protocols (like ISO 20022) will make African payment systems more resilient.
Some central banks are investing in regional payment switches capable of handling both retail and high-value transactions, providing redundancy in case of network outages.
The Role of Regulation and Collaboration
African regulators recognize that fragmented systems slow down trade and remittance growth. Collaborative efforts are emerging:
- The East African Payments System (EAPS) links central banks in Kenya, Tanzania, Uganda, and Rwanda.
- The SADC RTGS system supports settlement in South African rand across Southern Africa.
- The Common Market for Eastern and Southern Africa (COMESA) promotes unified digital financial laws.
Each initiative brings the continent closer to frictionless, reliable cross-border settlements.
The Human and Business Impact of Failures
Payment failures are not only technical issues — they directly affect livelihoods. Migrant workers lose days of wages, small exporters face cash flow interruptions, and financial institutions lose customer trust.
Delays also weaken trade competitiveness. Businesses unable to guarantee fast payments risk losing clients to firms using better-connected networks or fintech alternatives.
Looking Ahead: A Connected African Payment Future
Africa is now on the path to building its own financial backbone. The combination of fintech innovation, regional cooperation, and regulatory modernization is gradually solving the continent’s payment fragmentation.
Within a few years, systems like PAPSS are expected to make instant, low-cost transfers between African nations a reality — using local currencies and regional liquidity, rather than distant intermediaries.