Opinion
Digital Highways: Can Africa’s New Payment Rails Unlock a Trillion-Dollar Trade Zone?
By Jastine Martine
The African Continental Free Trade Area (AfCFTA) promises to unite 1.4 billion people across 54 countries into a US$3.4 trillion market. On paper, it’s transformational.
In practice, there is an uncomfortable reality: paying a supplier in neighboring Nigeria is harder and costlier than paying one in New York.
AfCFTA eliminated tariffs. But payment barriers now cost more than those tariffs ever did.
The Correspondent Banking Tax
When a Kenyan manufacturer pays a Nigerian supplier, the money doesn’t travel from Nairobi to Lagos. It routes through correspondent banks in London or New York, converting from shillings to dollars to naira.
Each intermediary extracts fees. The process takes three to five days, sometimes weeks.
The damage is quantifiable. Transaction costs run 8-12 percent when accounting for fees, foreign exchange spreads, and locked-up working capital.
A Ghanaian textile manufacturer receiving a Kenyan order must finance production for weeks, lose 10 percent to payment costs, and pray currency volatility doesn’t erase her margins entirely. More often than not, she declines.
The Kenyan retailer imports from Asia instead.
This story, repeated millions of times, explains why intra-African trade represents just 15 percent of the continent’s total commerce, compared with 58 percent in Asia and 67 percent in Europe. Only 15 percent of sub-Saharan SMEs engage in international trade.
The problem isn’t ambition. It’s infrastructure.
The Rails Revolution
Digital payment rails are to money what highways are to cars. You can build the finest payment apps, but without underlying infrastructure, funds cannot cross borders efficiently.
Traditional correspondent banking resembles a relay race through multiple jurisdictions. Modern rails work differently: Bank A sends instructions to the rail system, which validates and settles in real-time.
Bank B receives funds in local currency within minutes, not days. Costs plummet.
The transformation Africa needs requires three characteristics:
- instant settlement,
- seamless interoperability between all payment systems, and
- local currency clearing without forced conversion to dollars or euros.
This isn’t theoretical. The infrastructure is being built right now.
The Pan-African Payment and Settlement System (PAPSS), launched in January 2022, represents the continent’s most significant financial infrastructure development. As of 2025, PAPSS connects 19 countries through 150 commercial banks and 14 payment switches.
Here’s how it works: A Ghanaian business instructs their bank to send cedis. The payment routes through Ghana’s central bank to PAPSS, which converts to Tanzanian shillings at real-time rates and delivers funds within 120 seconds.
No dollars. No London intermediaries. No three-day wait.
The growth trajectory is remarkable. Fourteen central banks have joined, including Egypt’s in November 2024, making Cairo a strategic link between Africa and the Middle East.
Morocco and Algeria came aboard in 2025. The system launched Africa’s first continental card scheme and a peer-to-peer African currency marketplace.
PAPSS aims to save African businesses US$5 billion annually in transaction costs – capital that stays on the continent, compounds over time, and funds growth.
Regional Systems Create the Foundation
While PAPSS provides continental infrastructure, regional systems remain critical. The East African Payment System connects Kenya, Tanzania, Uganda, Rwanda, and Burundi. West Africa operates through the West African Monetary Zone.
National instant payment systems in Nigeria, Ghana, Kenya, and South Africa process millions of daily transactions.
The winning strategy isn’t replacement – it’s connection. PAPSS acts as a “network of networks,” linking regional systems and providing the continental settlement layer they previously lacked.
What This Unlocks
The transformation is concrete. Previously, a South African company ordering Egyptian agricultural equipment faced a 25-day transaction cycle with 8-12 percent costs.
With connected rails, payment settles within 24 hours, the transaction completes in 15-20 days, and costs drop to 2-3 percent.
For SMEs living and dying by cash flow, 24-hour settlement changes everything. Production starts with secured payment. Working capital requirements collapse.
More small businesses can participate in regional trade.
Perhaps most significant: formal digital payments become cheaper and easier than informal alternatives. When trade formalizes, governments gain tax revenue, businesses build credit histories, and the formal economy expands.
Real-time payment data gives policymakers visibility into trade flows they never had, enabling better decisions and reduced illicit financial flows.
Challenges Remain
Infrastructure exists, but adoption lags. While 47 countries ratified AfCFTA, only 11 actively trade under its rules as of September 2025.
Many businesses don’t know PAPSS exists. Connected banks haven’t trained staff or promoted services.
Regulatory fragmentation persists across 54 jurisdictions with different priorities, risk tolerances, and colonial legal legacies. Foreign exchange liquidity in smaller currencies poses challenges – who provides markets for trading Zambian kwacha against Senegalese CFA francs?
Settlement risk management requires sophisticated systems and clear legal frameworks.
Trust takes time. Businesses comfortable with familiar correspondent banking, despite its inefficiency, hesitate to switch.
Building track records matters. As PAPSS processes more transactions successfully and major banks connect, confidence builds and adoption accelerates.
But there are no shortcuts.
The Path Forward
Success requires coordinated action. Policymakers must accelerate PAPSS adoption, align AfCFTA trade policy with payment infrastructure strategy, and create business incentives through tax breaks and simplified compliance.
Central banks should support open, interoperable systems, establish regulatory sandboxes for fintech innovation, and harmonize regulations regionally while working toward continental standards.
Banks must connect to PAPSS now, capturing first-mover advantages in specific corridors. Smart institutions are partnering with fintechs, training staff extensively, and actively promoting cross-border payment services.
Development partners should catalyze infrastructure investment, fund regulatory capacity building, and measure success by transaction volumes, not policy documents.
East Africa offers valuable lessons. Political commitment to integration, high mobile money penetration, and progressive fintech regulations in Kenya and Rwanda created an enabling environment.
Starting with high-volume corridors built proof points before expanding to complex routes. The pattern is clear: regional integration precedes continental integration.
From Vision to Reality
Policy announcements don’t equal working infrastructure. PAPSS launched in 2022, but real scale is happening now and will continue through 2030.
Building trust takes longer than building technology. A central bank can connect to PAPSS in months; convincing businesses to switch from correspondent banking takes years.
Success looks like this: A Ghanaian SME paying a Kenyan supplier without thinking about it. Mobile money working seamlessly across borders.
Trade finance products based on cross-border transaction history. Real-time data informing policy decisions.
AfCFTA Secretary-General Wamkele Mene recently cited a 3.2 percent increase in intra-African trade, reaching US$192.2 billion in 2023. Progress, certainly. But the potential is multiples higher if payment infrastructure enables rather than constrains commerce.
The $3.4 Trillion Choice
AfCFTA represents Africa’s most ambitious economic project since independence. But vision doesn’t build markets – infrastructure does.
The most critical infrastructure determining whether AfCFTA succeeds or stalls is digital payment rails.
The technology exists. Political will is present. The business case is proven. The fundamental question is whether stakeholders will move fast enough.
Will remaining central banks prioritize integration? Will connected banks promote usage? Will businesses switch from familiar but inefficient systems? Will regulators harmonize standards or protect national interests?
These decisions, being made now in central banks, finance ministries, bank boardrooms, and fintech startups across Africa, will determine whether AfCFTA transforms the continent’s economy or becomes another unfulfilled promise.
The fundamentals support optimism. Africa has 1.4 billion increasingly connected people.
Mobile money penetration leads globally. Fintech innovation is exploding.
Young, digitally native populations are ready. And crucially, the infrastructure isn’t conceptual – PAPSS is processing real transactions, banks are connecting, countries are joining, volumes are growing.
Digital payment rails create the financial nervous system allowing Africa to trade with itself, build regional value chains, and capture the full promise of integration. The infrastructure is ready. The opportunity is now. The question is whether we are ready to use it.
Jastine Martine is a Business Analyst and Resident Technologist at HEBO Consult in Dar es Salaam, Tanzania. He specializes in process optimization and digital transformation, converting complex business challenges into clear, data-driven solutions. Jastine is passionate about advancing Capital Markets and Investment Finance across Africa.
