Africa’s cross-border payment regulations need an overhaul
- Why is moving money across Africa so costly?
- What are the regulatory barriers remittance providers encounter when building their payment networks?
Moving money across Africa is costly and it takes several days for funds to hit the recipient's account.
Transferring $100 from Canada to the Democratic Republic of Congo could take 1-3 business days using a local Canadian Bank. Western Union could shorten that trip by 24 hours, taking 0-2 days. That’s hardly any improvement and certainly not ideal when the funds are a matter of life and death for the recipient. Africa’s international transfer fees exceeded the global average in 2020 (8.9% of the transaction value vs. 6.8%). It’s no wonder that 20-95% of remittances flow through informal channels (i.e. cash) for some African countries.
McKinsey estimates that cross-border payment firms generated $9 billion in revenues in 2020—38% of Africa’s total e-payments revenues in the same year. These include popular payment giants like MFS Africa, WorldRemit, Chipper Cash, AZA Finance, etc. These companies help consumers and businesses send and receive
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