Instant Payment Systems Across Africa: A Blueprint for Global Financial Innovation

By Samkele Mchunu

African governments are pioneering the transformation of financial services by implementing instant payment systems. These systems significantly reduce transaction costs and processing times, particularly benefiting individuals who rely on remittances. By removing the need for cash withdrawals and travel to remittance agents, they offer lower fees and better exchange rates, greatly enhancing financial accessibility.

In a move set to revolutionize financial transactions, more than half of African countries have adopted instant payment systems. These systems enable seamless money transfers across different banks and financial service providers, facilitating quick and affordable transactions for individuals, businesses, and governments. This advancement aims to connect all African nations with instant payment systems by 2030, setting a precedent for global financial inclusion and efficiency.

African leaders are urged to capitalize on this progress by creating interconnected systems for continent-wide instant payments. Such a network is crucial for the African Continental Free Trade Area, potentially boosting intra-African trade from 18% to 50% by 2030. Currently, 34 African countries have instant payment systems, with several regional systems like GIMACPAY, PAPSS, and TCIB already facilitating cross-border payments. These systems exemplify the G20 Roadmap for Enhancing Cross-border Payments, highlighting their potential to foster growth and trade through faster, cheaper, and more transparent transactions.

The integration of instant payment systems is not only a technological leap but also a social imperative. By enabling instant currency-to-currency payments, these systems can drive the growth of pan-African companies, spurring innovation and competition that benefit consumers. Ensuring inclusivity is critical, especially for women, who face significant barriers in accessing financial services. In five African countries, women still need male co-signers to open bank accounts. More women must be involved in designing these systems, and gender-specific data tracking is essential to measure progress.

The upcoming African Development Bank meeting in Kenya presents an opportunity for leaders to endorse and expand these initiatives, promoting inclusive growth and streamlined access to services. Instant payment systems are a key component of a secure and inclusive digital public infrastructure, alongside digital IDs and data exchange. Leaders are encouraged to harmonize regulations and adopt a unified payment services directive, similar to Europe’s, to navigate complex regulatory landscapes and enhance competition, consumer protection, and women’s economic empowerment.

Establishing these systems requires political will, technical assistance, and funding. Entities like the World Bank and AfricaNenda offer technical assistance, while open-source software solutions like Mojaloop can reduce costs. Funding from initiatives such as Co-Develop is available, with the overall cost of implementing inclusive instant payment systems across Africa estimated at a few hundred million dollars—a small price for significant social impact.

By striving towards interconnected, inclusive instant payment systems, Africa can set a global example. This transformation will enable individuals like Salimata to support their families instantly and affordably, fostering prosperity and resilience across the continent.