Africa is building a single payments market but its currencies remain divided

While Africa's Payments Are Getting Faster, the Money Still Has to Settle.

A payment from Kenya to Tanzania can reach the recipient in seconds. What happens to the money behind that payment is considerably more complicated. A customer in Nairobi can initiate a transfer in Kenyan shillings and have a recipient in Dar es Salaam receive Tanzanian shillings without seeing the machinery in between. Behind that experience, banks and payment providers still have to source the recipient's currency, manage the exchange and settle the obligation between institutions.

This is becoming more important as African countries connect a growing number of instant payment systems. The networks carrying payment instructions across borders are improving rapidly. The harder problem is settling those transactions when the currencies involved have limited liquidity or cannot easily be exchanged directly.

AfricaNenda, which tracks inclusive financial systems across the continent, counted 36 live instant payment systems across 31 African countries in its 2025 research. Three were regional platforms: GIMACPAY in Central Africa, TCIB in Southern Africa and the continental Pan-African Payment and Settlement System (PAPSS). Four additional regional mechanisms were under development.

Sabine Mensah, AfricaNenda's deputy chief executive officer, points to the currency fragmentation underneath those networks.

> "What we are saying is that having more than 40, or around 42, currencies in Africa makes the process more difficult," Mensah noted.

Africa is getting better at moving payment instructions. The next challenge is moving the money behind them.

The Payment Is Instant. The Settlement Is Not.

Cross-border payments have two different jobs; the first is moving the payment instruction between providers in different markets. The second is settling the money those institutions owe each other.

Consider a payment moving from Kenya to Tanzania. The sender's provider can send the instruction to a Tanzanian counterpart in seconds. But the institutions still have to account for the Kenyan shillings leaving one side and Tanzanian shillings being made available on the other.

One way providers handle this is through pre-funded accounts with partner banks in each market. A provider holds local currency in Tanzania in advance, then instructs its Tanzanian partner to release those funds when a customer sends money from Kenya.

It works, but it ties up capital.

A provider operating across five African markets may need to hold balances in several local currencies before its customers send a single transfer. That money sits in fragmented accounts instead of being deployed elsewhere. The provider also takes on foreign exchange exposure as the value of those balances changes.

Where currencies have limited direct liquidity, transactions can also rely on intermediary currencies and correspondent banking relationships. That adds another layer of conversion, cost and operational complexity.

EWven though the payment may be instant for the customer, the financial institutions still have to figure out who owes whom, in which currency, and where the liquidity comes from.

Building the Rails

Africa has spent years building infrastructure to move payment instructions across borders faster.

In East Africa, the EAC has approved a Cross-border Payment System Masterplan, while bilateral links are beginning to connect national systems. A 2026 proof of concept, for example, linked Tanzania's TIPS with Rwanda's National Payment Switch.

Other regions are building similar connections. WAEMU operates a shared instant payment infrastructure in West Africa, while GIMACPAY connects markets in Central Africa and TCIB supports multi-currency payments across the SADC region.

The pieces are coming together at the regional level. But faster routing does not solve the harder question of how the institutions involved settle what they owe each other.

That is the problem PAPSS is designed to address.

Developed by Afreximbank alongside the African Union and the AfCFTA Secretariat, PAPSS is designed to reduce reliance on correspondent banking networks outside Africa by providing a continental framework for clearing and settling intra-African payments in local currencies.

That infrastructure is beginning to connect to domestic payment systems. In February 2026, Kenya's PesaLink integrated directly with PAPSS, linking more than 80 Kenyan financial institutions to a continental network of more than 160 participating lenders and payment providers.

The model allows a Kenyan buyer to pay in shillings while a supplier elsewhere in Africa receives its local currency, without the transaction having to pass through dollars as an intermediary.

But moving the payment instruction is only part of the job.

Someone still has to provide the other currency, price the exchange and settle the obligation.

Who provides that liquidity?

The FX Problem Behind the Payment

Suppose a Kenyan company buys goods from a Nigerian supplier. The buyer has Kenyan shillings. The supplier wants naira.

A payment system can carry the instruction from one institution to another. It cannot, by itself, create a liquid market for KES/NGN.

Someone still has to provide the naira, price the exchange, absorb the foreign exchange risk and settle the resulting obligation.

This is why local-currency settlement is only part of the solution. The other part is having enough buyers and sellers for the currencies involved.

Afreximbank introduced the PAPSS African Currency Marketplace to address that problem by providing a venue for commercial banks and corporate treasuries to trade African currency pairs directly. During its pilot, more than 80 African corporates transacted across 12 currency pairs, settling commercial obligations in local currencies.

The broader challenge remains significant. AfricaNenda reported that 11 African instant payment systems supported cross-border functionality in 2025, up from six in 2024. But thin foreign exchange liquidity, regulatory differences and settlement complexity continue to constrain how far those connections can scale.

Connecting payment systems solves the routing problem. It does not automatically solve the currency problem underneath them.

Why the Intermediary Dollar Matters

When two currencies cannot be exchanged directly at sufficient volume, an intermediary currency can sit between them.

A provider may convert one local currency into dollars, move the funds through an intermediary and then convert the dollars into the recipient's currency. Each conversion can introduce a spread, a fee and another point where the transaction can slow down.

Especially because cross-border payments in Africa remain expensive. World Bank data puts the average cost of sending $200 to Sub-Saharan Africa at roughly 8.8%, well above the UN Sustainable Development Goal target of 3%.

Instant payment systems can remove some of the manual processing and delays around a transfer. They cannot create market depth for currency pairs that rarely trade against each other.

That is the gap PAPSS and other settlement initiatives are trying to address.

Different Regions, Different Starting Points

The settlement problem also looks different across Africa's regional blocs.

The eight countries in WAEMU share the CFA franc, while six Central African countries share the CEMAC CFA franc. Within those monetary unions, cross-border payments do not face the same currency-conversion problem as transactions between independent currencies.

Southern Africa has taken a different approach, with TCIB supporting multi-currency settlement across the SADC region.

East Africa is pursuing deeper monetary integration and an eventual common currency, but its payment systems are being connected before that political milestone arrives.

That matters because Africa does not need to wait for a single continental currency before making cross-border payments work better. Regional settlement mechanisms can address the problems specific to their markets while connecting to continental infrastructure such as PAPSS.

Regulation Still Has to Catch Up

The technical connection between two payment systems can be relatively straightforward. Operating across two jurisdictions is harder.

Payment providers still face different licensing requirements, consumer protection rules, data regulations and anti-money laundering obligations in each market.

Mensah argues that regulatory harmonisation needs to keep pace with technical integration. Regulatory passports, for example, could allow a provider authorized in one compliant market to operate in another without repeating the entire licensing process.

That matters because a payment network only becomes useful at scale when institutions can actually use it across borders. The rails can be connected, but incompatible rules can still keep the traffic low.

Nigeria's NIP shows why that scale takes time. The system has evolved from a domestic retail transfer network into a high-capacity platform handling more complex commercial and public-sector payments. That expansion required supporting infrastructure for identity verification, fraud monitoring and consumer recourse alongside the payment rail itself.

The lesson for cross-border systems is similar: connecting two switches is the starting point. Sustained volume requires the institutions, rules and safeguards around them to work as well.

The Infrastructure Beneath the Rails

Africa's payment infrastructure is moving toward greater interoperability. Domestic instant payment systems are expanding, regional platforms are connecting neighboring markets and PAPSS is creating a continental layer for local-currency settlement.

But the hardest part is happening underneath those rails.

Central banks and financial institutions still need to provide liquidity between currencies that rarely trade directly. Payment providers need ways to manage the capital and FX risk created by cross-border balances. Regulators need to make it possible for those institutions to operate across markets without rebuilding the same infrastructure country by country.

While the payment can already feel instant to the person sending it. The next challenge is making the settlement behind it just as simple.