AfricaNenda: Key Trends Shaping the Instant Payment Systems Landscape in Africa

Posted on Apr 26, 2024 by Jacqueline Jumah, Director of Advocacy & Capacity Development, AfricaNenda

The instant payment systems (IPS) landscape in Africa is vibrant, propelled by the growing need for faster, interoperable, more secure, more affordable, and more convenient retail payment options. As of 2023, there were 32 live public or public-private instant payment systems in Africa, processing over 31 billion transactions reaching USD 1.18 trillion in value.[1]

Seventeen countries and three regions are in the process of developing additional domestic and regional instant payment systems, respectively, indicating a growing digital financial services ecosystem. Within this context of increased payment system availability, there is an opportunity to ensure that the new and existing systems also expand IPS inclusivity and accelerate financial inclusion for all through policy reforms, investment, and technical assistance.

A number of market, technology, and consumer trends show promise for facilitating not only growth, but inclusive growth, by influencing the access, usage, and efficiency of digital payments across Africa. The article highlights them and how they may help meet the evolving demands of Africa’s growing digital economy.

Market Trends Continue to Influence IPS Participants and Enable Scale

Digital financial services championed by mobile technology, fintech innovation, and financial inclusion efforts have made agents key enablers within the digital payments value chain. The number of active agents grew to 8.3 million as of 2023.[2] They provide a crucial bridge between the cash and digital worlds, especially for the financially underserved and excluded, by digitizing over two-thirds of all the money entering the mobile money ecosystem — $307 billion in 2023.

Agents facilitate a variety of transactions beyond just airtime distribution and cash-in-cash-out services. Larger agent networks associated with payment service provider participants in an IPS will help bring scale and utility to the system. Some countries, e.g., Kenya, Senegal, and Tanzania, have mandated interoperability between payment system providers and prohibited exclusivity of mobile money agents. In these countries, the same agent can serve multiple financial services providers, thus facilitating the expansion of agent networks to drive the scale of digital payment channels.

In addition to interoperability policies, several African countries are undertaking other legal and regulatory reforms with the goal of driving inclusive access and scale. For example, the West African Economic and Monetary Union (WAEMU) and West African Monetary Zone (WAMZ) countries, as well as Kenya and Uganda, among others, are updating their payments and e-money laws to provide licensing for non-bank participants and provide for the use of technology in onboarding. Among other measures, these reforms aim to ...

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