Digital payments adoption in Africa building, but inclusivity lagging

As African countries continue their efforts to build digital public infrastructure (DPI), the digital payments component of DPI is fast gaining ground with the volume of payments processed through instant systems having grown by 37 percent in the last five years, representing over $1 trillion.

This growing trend of instant payment systems (IPS) adoption in Africa is reflected in the State of Inclusive Instant Payments System in Africa Report (SIIPS) 2024 launched last month.

The report, unveiled during a ceremony in the Ghanaian capital Accra, highlights efforts being deployed to make instant payment systems more available and accessible through the building of inclusive payment infrastructure, with detailed case studies from Mauritius, South Africa, Tanzania and Zimbabwe.

In the last year, the report notes, the IPS landscape in Africa has grown to include 28 domestic IPS in 20 countries and three regional ones, which take the number of live and functional IPS to 31. Twenty of these IPS support e-money instruments.

The publication finds that while the availability and maturity of instant payment systems has significantly increased in the past year, there is still much to do to ensure that these systems serve everyone including vulnerable groups like women and the poor.

The report specifies that the progress notwithstanding, no African country has yet attained “a mature level of inclusivity,” but more of them have only reached “basic or progressed levels of inclusivity.”

“Specifically, most IPS still do not support a broad range of use cases, e.g person-to-person (P2P), person-to-business (P2B), business-to-business (B2B), government-to-person (G2P) etc, across a variety of participant types. Nor do they yet provide effective recourse options to end users,” the report’s executive summary notes.

“Thus, there is still an urgent need for IPS to evolve into inclusive IPS (IIPS) if they are to effectively deepen financial inclusion in Africa. By enabling easy and instant transfer of money between people, businesses and governments, IIPS can evolve to serve as the key digital public infrastructure in Africa,” it recommends.

The report indicates that while there is some steady progress in the adoption of IPS, there is also need for some hurdles to be cleared to pave the way for expansion and inclusivity.

“For IPS to become truly inclusive, they will need to increase functionality, overcome barriers related to trust, affordability and accessibility, and provide end-users with meaningful recourse,” the report suggests.

Opportunities to promote inclusivity

It also notes that there are key trends and opportunities which can be leveraged to promote inclusivity. These include considering foundational DPI as a concept, domestic payments digitization, regulatory frameworks related to digital KYC and fintech licensing.

The SIIPS 2024 report is an annual publication which details developments in the Africa retail instant payments ecosystem, gauging the ground realities, successes, challenges and perspectives for the future in terms of functionality and governance. It is produced thanks to a collaboration of AfricaNenda Foundation – the organization promoting financial inclusion, the UN Economic Commission for Africa (ECA) and the World Bank. It also has funding support from the Bill and Melinda Gates Foundation. This year’s report is the third edition.

Early this year, AfricaNenda co-organized a workshop in Cameroon to discuss financial inclusion in central Africa.

Article Topics

Africa  |  biometrics  |  digital ID  |  digital payments  |  digital public infrastructure  |  financial inclusion