Mobile money leaders say political will needed to fix cross-border payments

The success of efforts to deepen intra-continental trade, including the landmark African Continental Free Trade Area (AfCFTA), depends in large part on the existence of cross-border payments systems. However, despite the success of mobile money on the continent, cross-border payments still add unnecessary costs and delays to businesses and individuals, industry leaders claim.

During the Africa Prosperity Dialogues in Aburi, Ghana, panellists called on governments and regulators to accelerate efforts to build robust inter-country payments systems to support intra-continental trade.

Ernest Addison, governor of the Bank of Ghana, said that expanding mobile money access, “could empower the underserved populations with essential financial tools to help unlock opportunities for savings, loans, and secure transactions, as well as promote economic stability and growth”.

Quoting McKinsey, Addison noted that Africa’s e-payments industry generated approximately $24bn in revenues in 2020, even though it accounted for a mere fraction of all payments. This, he said, shows that “e-payments have the potential of being a major growth pole for Africa.”

Cross-border payments, however, continue to be hampered by legacy challenges, including inadequate payment infrastructure, inconsistent regulation, limited policy coordination and user education, and security and fraud concerns.

Addison pointed to the Pan-African Payment and Settlement System (PAPSS), an initiative of the African Export-Import Bank, as an ideal solution to facilitate efficient and secure financial transactions across borders, stressing its potential for scalability and innovation in cross-border trade.

As at the end of 2023, 12 central banks, including those from the West African Monetary Zone (WAMZ) and the East and Southern Africa regions, had joined, with others on the verge of signing on to the platform.

Industry claims lack of political will

Patricia Obo-Nai, chief executive of Vodafone Ghana, noted that operators had been able to solve the problem of interoperability in-country, meaning that money can be sent from one network to the other seamlessly.

However, the inability to do so across borders takes a toll on customers who are unable to send money to family or business associates in different countries. For some customers this means making withdrawals and sending money through offline methods.

“What we have done is take away the ability to build a digital footprint,” said Oba-Nai.

That means, she said, that many customers have no records that could help them access loans and other financial products.

Obo-Nai acknowledged that regulators have concerns including data privacy, security and exchange rates but said that mobile operators are able to address these concerns.

For example, she pointed out, mobile operators are able to charge customers roaming on their network while away from their countries of origin. This indicates, she said, that the main barriers are of governance and political will, rather than operational issues.

“The big one is just the political will to be able to do it. If somebody takes ownership and says, I want to make this happen. I am confident it will happen,” she stressed.

Eli Hini, chief executive of MTN Mobile Money, Nigeria, said that progress in Ghana showed what is possible elsewhere.

“We have been able to enable interoperability in Ghana and now no one is worried about settlement because they know that process has been taken care of. That is what we need to achieve across Africa,” he said.

Regulators will need to sit down to discuss the key issues and determine the protocols to put in place. He added that it will be necessary to ensure that the barriers for participation are lessened for small businesses.

“We must make it easy for them to participate in the conversation around requirements and that they can meet those requirements because they are the ones who struggle every day to trade across borders,” he emphasises.

While lots of investments have been made in payment infrastructure, Angela Wamola, head for sub-saharan Africa, GSMA, pointed out that only 60% of the capacity that is available is utilised by customers. Even though this is an improvement on 2014, when only 12% was in use, Wamola questioned whether investors would be encouraged to deploy resources towards systems that would take 10 or 20 years to reach usage capacity.

“We have to ask ourselves a difficult question. What is it that we are not doing that is not allowing the infrastructure, the capital that has been employed to be utilised?”

Technology, she said, is the least of the problems, pointing to the east African region, where it has been possible to “roam like home” for a decade, something that has not been replicated in the other regions.

“What we need to do is to make use of the legal frameworks and systems that we already have to make it possible for people to work and get their money in a way that is safe, secure and convenient because that is what interoperability is about,” she charged.

Private sector disruption can set the pace

Lacina Koné, CEO of Smart Africa, challenged operators not to be constrained by regulators but instead to focus on innovations that bring convenience to their customers.

“If Safaricom had waited for the regulators in Kenya to allow MPESA, it would never have happened,” he argued, adding that “the operator followed choices…then the rules, that is the regulator, followed”.

Governments, he said, are not positioned to make the rules until the innovations are actually in place, as had happened with the iterations of mobile technology up to 5G. Innovators must thus focus on disruption and device solutions to the challenge of cross-border payments.

“We need to wake up. It is only disruption that will enable us to leapfrog; otherwise we will continue to trail the rest of the world.”

Convened by the Africa Prosperity Network in conjunction with the African Continental Free Trade Area secretariat, the Africa Prosperity Dialogues are an attempt to focus the minds of decision makers on the practical steps that can be taken to reverse the dire narratives around the continent and to procure a consensus on how Africa’s wealth of opportunities can be fully harnessed into growth.