Opinion
Africa’s $5 Billion Leak: Plugging the Hole with Homegrown Payments
By Sheena Raikundalia
Every year, Africa hemorrhages an estimated US$5 billion – not to corruption, not to mismanagement, but simply to the cost of moving money across its own borders. This staggering figure isn’t the result of incompetence.
It is the consequence of a global financial architecture that was never designed with Africa in mind.
Consider a routine business transaction: a Kenyan company pays a US$26,000 invoice to a supplier in Uganda. In a truly integrated market, that payment would flow directly from Nairobi to Kampala.
But in today’s reality, it takes a costly detour through global financial hubs:
- Kenyan shillings (KES) are converted to U.S. dollars (USD) – incurring a 1–2 percent foreign exchange fee.
- The USD is routed through New York or London, adding US$20–US$50 in intermediary bank charges.
- The dollars are then converted into Ugandan shillings (UGX) – another 1–2 percent lost to exchange spreads.
By the time the Ugandan supplier receives the funds, US$500 to US$1,000 has vanished – not into infrastructure, innovation, or local economies, but into the pockets of foreign banks and payment processors.
This inefficiency isn’t limited to trade. Africa’s diaspora sends home US$95 billion annually, the highest volume of any developing region.
Yet, they pay the world’s most expensive remittance fees – averaging over 8 percent, far above the global average of 6.3 percent and the UN’s Sustainable Development Goal target of 3 percent.
We are denied visas to travel, yet our money is forced to take first-class flights through New York and London – just to cross a border that should be seamless.
The truth is stark:
- Africa pays the highest cost for credit.
- Africa pays the highest cost for payments.
- Africa pays the highest cost to send its own money home.
This isn’t inefficiency – it is by design. The global financial system was built to serve the interests of the Global North, not to empower African economies or facilitate intra-continental commerce.
But There’s Hope – And It’s Already Here
Enter the Pan-African Payment and Settlement System (PAPSS): a homegrown solution launched by the African Export-Import Bank (Afreximbank) and the African Union. Already live and operational, PAPSS connects 15 central banks, 150 commercial banks, and 14 national payment switches, with the capacity to process US$300 billion in intra-African trade annually.
With PAPSS, that same Kenya–Uganda transaction transforms:
- Direct KES-to-UGX conversion at a fraction of the cost (just 0.2–0.5 percent spread).
- Real-time settlement through African central banks – no New York or London middlemen.
- Funds delivered in hours, not days.
The result? That US$26,000 payment now costs only US$60–US$150 – unlocking US$500–US$950 in savings per transaction. Multiply that across millions of cross-border payments, and the economic impact is transformative.
This isn’t just about convenience. It is about monetary sovereignty, trade efficiency, and keeping value within Africa.
Every dollar saved is a dollar that can fuel SMEs, create jobs, and deepen regional integration under the African Continental Free Trade Area (AfCFTA).
The Real Challenge? Adoption, Not Invention
The technology exists. The political will is growing.
What’s needed now is accelerated implementation – from regulators mandating PAPSS integration to banks onboarding merchants and consumers.
Imagine a continent where a farmer in Malawi can pay a machinery supplier in Senegal as easily as someone in California pays a vendor in Texas. That future is within reach.
One Africa. One market. One payment system.
The blueprint is ready. Now, we must build it – together.
Sheena Raikundalia is an accomplished entrepreneur, former lawyer, government policy advisor, and angel investor with deep expertise across the legal, financial services, and impact investment sectors in Europe and Africa. She has played a pivotal role in advancing Africa’s technology and innovation ecosystems, leveraging a career that spans top-tier London law firms, leadership as Country Director of the UK-Kenya Tech Hub for the UK Foreign, Commonwealth & Development Office (FCDO), and her current position as Chief Growth Officer at agri-tech company Kuza One. Sheena is recognized for her strategic vision, commitment to fostering innovation, and strong advocacy for Africa’s growth potential in technology, entrepreneurship, and impact investment.