Diverse payment channels are the foundation of enhanced intra-African trade

By Aart Jurriaanse, Business Development Executive at Pay@

Eighteen months since the commencement of the African Continental Free Trade Agreement (AfCFTA), and despite less than ideal circumstances due to the COVID-19 pandemic, 43 African states have ratified the agreement. What’s more, nearly 90 percent of negotiations on product-specific rules have been concluded, covering more than 70 percent of intra-African trade[ii]. But while the foundations for enhanced exchanges between African markets may be laid, the emphasis is now on implementation, which demands that attention be placed on the continent’s payment landscape.

Among other things, AfCFTA is set to reinvigorate economic activity in markets across the continent. In doing so, analysts at the World Bank believe that AfCFTA will lift 30 million people out of extreme poverty and raise the incomes of 68 million more, thanks in a part to higher levels of intra-African trade, which is set to generate a combined consumer and business spending of $6.7 trillion by 2030[iii].

But as inter-governmental conversations around exchange controls and non-tariff barriers to trade begin to conclude, implementation is now becoming key. In that vein, it is important to acknowledge that – to reach these anticipated levels of spending, and in turn improve incomes and quality of life – consumers across the continent must have access to the relevant tools and technology required to participate in the world’s largest free trade market. Specifically, we need to support their ability to make payments, which has been the lifeblood of commerce since the earliest forms of exchange first emerged.

The provision of payment tools and technology is paramount in the African context, where 57% of the African population do not have a traditional bank account[iv]. To address this challenge, developments in Africa’s payments landscape have been steered by collaboration between banks, telcos and fintech startups, to deliver new products and services in a more cost-effective manner for existing customers.  To this end, innovation and partnerships in African payments is helping to drive frictionless transactions and enhance borderless financial services across regions.

At the same time, regional payment systems are starting to be deployed across the continent, in a bid to allow payments to flow from one system to another and provide pan-regional settlement capability. One example of this is the ‘Tripartite Free Trade Area’ between the East African Community, the Southern African Development Community (SADC) and the Common Market for Eastern and Southern Africa (COMESA). In addition, the recently launched Pan-African Payment Settlement System (PAPSS), which has been designed to enable instant payments across African borders, will further drive this trend towards payment system interoperability.

These are welcomed developments, which are undoubtedly playing a key role in driving market integration across the continent. However, to sustain this merging of African consumer bases – and to secure the ability of Africans to consume in the AfCFTA environment – we need to reflect on the continent’s sheer diversity in culture and circumstance and take note of the fragmented payments landscape that sees different communities, countries, and whole regions transacting in vastly different methods.

To fully realise the potential of the AfCFTA to stimulate consumer spending, contribute to economic growth, and enhance the quality of life then requires that African consumers be afforded a range of payment solutions to enable transactions across borders in methods that appeal to their different preferences and demands. This will in turn promote financial inclusion, which will see more Africans able to engage with the enormous market opportunity that is the AfCFTA.

This has been the core mission of companies like Pay@, who have recently expanded their footprint across Africa, which seeks to promote financial inclusion and drive socio-economic growth. This is achieved by developing tailored payments solutions – including mobile, card and smartphone payments, EFTs, wallets, and more – to African consumers, and in particular, those that find themselves in under- and unbanked communities.

About Pay@

Established in 2007, Pay@ is one of Southern Africa’s leading payment solutions providers and is trusted by prominent South African organisations to optimise their billing and payment processes. Pay@ is in the business of providing payments experiences, offering a capability that allows a client to accept payment from their customers through relevant, simple, secure and reliable payment journeys. The company offers consumers a growing variety of secure, innovative and convenient bill presentment and payment platforms. Its robust system ensures highly efficient processing, with unallocated payments being eliminated and proven transaction success rates of more than 99.996%.

For more information about Pay@, go to https://payat.co.za.



[ii] https://www.un.org/africarenewal/magazine/january-2022/afcfta-what-has-worked-and-way-forward%C2%A0-agricultural%C2%A0trade

[iii] https://www.brookings.edu/blog/africa-in-focus/2019/05/30/figures-of-the-week-with-afcfta-officially-in-force-africa-is-now-the-largest-free-trade-area/