Breaking barriers in Africa’s cross-border payments: A roadmap for reform

Lagos, a booming market city, hums with trade. Yet sending money from here to Accra is anything but seamless. A Lagos businessperson often must swap naira for US dollars, then dollars for Ghanaian cedis, each exchange adding fees and delays. When the cedis arrive, a routine transfer can lose roughly 10 percent in costs and sit for days in limbo. Such local scenes reveal a continent-wide issue: African cross-border payments are notoriously slow and expensive.

Across Africa, dozens of national payment systems work independently, creating a patchwork. Each country has its clearing rails and rules, and intra-African trade often goes through distant dollar or euro networks. The result is fragmentation: traders and migrant families pay multiple fees and face red tape at every step. According to the World Bank, sending $200 across borders in sub-Saharan Africa can cost nearly 8 percent, roughly triple the global average, hammering cash-strapped SMEs and migrant families alike.

Nigeria feels this friction acutely. Africa’s largest economy receives roughly $20 billion yearly from its diaspora, about a third of sub-Saharan Africa’s remittance flows. In theory, those dollars should shore up the naira, but in practice, much of the money takes informal routes. Many Nigerians abroad prefer crypto apps or underground dealers to get better exchange rates and avoid official bottlenecks. The result is a persistent gap between the naira’s official and parallel-market rates, stoking inflation and currency volatility.

Currency variety makes matters worse. Africa has more than 30 currencies. In West Africa today, Nigeria’s naira, Ghana’s cedi, and the euro-pegged CFA franc coexist. A Lagos exporter heading to Benin must swap naira for dollars (or euros) and then pay fees at each hop to CFA francs. ECOWAS has long discussed a single currency (the Eco) by 2027, which could eliminate such conversions. However, meeting the strict fiscal and inflation targets has proved elusive, so multiple currencies remain an unavoidable extra cost.

Missing infrastructure compounds the problem. Nigeria’s instant payment system (NIP) and Ghana’s GhIPSS settle transfers instantly at home but aren’t linked internationally. So, transferring from Lagos to Accra requires manual work and can take days. Even wildly successful mobile-money platforms remain largely domestic: you can’t easily send Kenya’s M-Pesa or Nigeria’s Paga to a wallet in another country. Few pilots exist, but in general, payment networks stop at borders.

However, there is cause for cautious optimism. Africa’s tech innovators are chipping away at these barriers. Fintech startups have built faster, user-friendly payment apps that stitch the continent closer. For example, Flutterwave’s new Send App lets Nigerians send money to Ghanaian bank accounts and mobile wallets in minutes, bypassing older channels. Chipper Cash, a Ghanaian-Nigerian venture, offers fee-free transfers between wallets across several African countries. Even crypto-based remittances are catching on: by converting naira into a dollar-pegged token and settling abroad, businesses bypass banks and slash fees.

Fundamental transformation requires policy as well as technology. Regulators must harmonise rules and encourage interoperability: imagine a Ghanaian mobile-money user paying a Lagos merchant directly or a Kenyan SME tapping a Rwandan RTGS credit line. Central banks should avoid sudden FX changes that shred confidence – aligning exchange-rate policies and removing extra transfer taxes would nudge more funds into formal channels. The African Continental Free Trade Area’s (AfCFTA) Pan-African Payment and Settlement System (PAPSS) is meant to connect central banks, but it’s still rolling out.

Closer to home, Nigeria can harness its diaspora better. The newly announced $10 billion Diaspora Fund and planned dollar bonds are positive moves to turn expatriate inflows into roads, schools, and businesses. Policymakers can expand on this by issuing diaspora-friendly bonds and easing profit repatriation. If remittances could more often flow into stocks, infrastructure, or tech startups – rather than only into bank deposits – the economy would reap outsized benefits.

Wilson Dike is a strategic Enterprise Sales Leader driving SaaS growth, C-suite engagement, and sustainable innovation, integrating IT, innovative infrastructure, and renewable energy solutions for transformation.

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