The Next Wave: Africa's payment rails have a participation problem

As AfricaNenda Foundation hosts media trainings across the continent, the reality of Africa's payment rails becomes more apparent. With 36 domestic and regional instant payment systems in place, governments, banks, and fintechs have invested heavily in payment infrastructure. However, this investment only benefits a narrow group of institutions, leaving the majority of the digital economy untouched. For Ezequiel, a trader in Abidjan, this means that the benefits of fast payments remain elusive. "If only banks and a few fintechs can use these systems," he says, "how do we expect the majority of people to participate in the digital economy?"

The instant payment systems in Africa have become a topic of discussion, with many touting their speed as a major accomplishment. But speed alone does not guarantee inclusivity. AfricaNenda's State of Inclusive Instant Payment Systems (SIIPS) framework highlights the need to examine who participates in these systems, which channels people can use, and whether different financial institutions can transact with each other. For instance, a switch that moves money between banks in two seconds but requires a fintech or mobile money operator to connect through a sponsor bank may be instant, but it is not inclusive. This setup creates a gatekeeper situation, where banks become the middlemen and add costs to transactions. The same problem appears at the consumer level, where infrastructure designed mainly around smartphones and banking apps excludes those who depend on USSD, agents, or feature phones.

The flat transaction charges that come with these instant payment systems can become disproportionately expensive for people making small transfers. For Akin, a small business owner in Lagos, this means that the benefits of fast payments remain out of reach. "If I'm making a small transfer, the fees become too high," he says. "It's not just about the speed of the payment, but also about making it affordable for everyone." The economics of exclusion become clear when we consider that Africa can build a technically advanced payment infrastructure that mostly benefits those who already have good access to financial services.

The training hosted by AfricaNenda Foundation changed how I think about the tech industry's favourite measure: speed. Once payments become fast enough, shaving another second off settlement matters much less than who can use the system, how much they pay, and which institutions are allowed to connect. That is where Africa's payments problem gets more interesting. The continent's payment rails have a participation problem, not a speed problem. By focusing on inclusion, Africa can build a payment infrastructure that benefits everyone, not just a select few.

As the African payment landscape evolves, I predict that we will see a shift towards more inclusive payment systems. These systems will not prioritize speed alone but will focus on making payments accessible to everyone, regardless of their financial status or the device they use. This will require a fundamental change in the way we design payment infrastructure, one that prioritizes participation over speed. The next wave of payment innovation will be driven by this understanding, and it will be exciting to see how it shapes the future of Africa's digital economy.

For millions of Africans like Ezequiel and Akin, the stakes are high. They need a payment system that is inclusive, affordable, and accessible to everyone. As Africa's payment rails continue to evolve, it is crucial that we prioritize participation over speed. By doing so, we can create a payment infrastructure that benefits everyone, not just a select few. The future of Africa's digital economy depends on it.