Nigerian cloud providers undeterred by AWS naira payments move as competition intensifies
Amazon Web Services (AWS) has stirred the Nigerian cloud market by allowing naira payments, but local providers like Okra and Nobus Cloud believe the move is more a formality than a game-changer. For them, AWS’s shift is just another move from a global giant, offering no real competitive advantage in a market increasingly concerned with currency fluctuations. “I don’t necessarily think it’s anything more than that [a move by from a big player],” said Fara Ashiru, CEO of Okra which launched Nebula, a cloud infrastructure product in 2024. “You are exchanging your USD bill at the going rate of naira. It’s the same thing, just in a different packaging.” Ashiru’s comments underline the crux of the local providers’ argument: While AWS now accepts naira payments, the cost structure remains unchanged— pegged to the USD and converted to naira at the prevailing exchange rate. They argue that local providers’ pricing mitigates the risks of exchange rate volatility. “Our cost is still about 30-35% lower than what AWS charges,” said Stephen Okoye, COO of Nobus Cloud, which offers its services to Nigerian businesses without the concern of foreign exchange swings. In 2023, after a sharp naira devaluation, many Nigerian businesses saw their cloud service costs skyrocket, priced in dollars. As a result, local cloud providers saw a surge in demand, offering naira-based billing at more affordable rates—appealing to Nigerian companies that earn revenue in local currency but previously had to pay in dollars. Local players like Okra and Nobus Cloud argue that while cost remains a key factor, it’s not their only differentiator. According to Ashiru, what truly differentiates them from global giants is their tailored approach to the Nigerian market. “Why are we building products that are hosted in countries that are so far away from the customers who are using our products? It’s about building a solution that’s geared towards African businesses,” she said. Another key argument for choosing local providers is data sovereignty. The 2019 National Cloud Computing Policy recommends that Nigerian businesses and government agencies prioritise local cloud services, and Nigeria’s Central Bank has also mandated that commercial banks host a portion of customer data locally. This regulatory environment is providing a significant boost to local providers, who are well-positioned to cater to this growing demand for data hosting within Nigeria’s borders. In 2024, local cloud providers began engaging with government agencies to become their preferred cloud service providers for sensitive data hosting. These talks have already begun to bear fruit, with some agencies making the switch to local providers, according to sources familiar with the matter. However, they declined to share further details, citing the confidential nature of the discussions. The local competition for AWS is not limited to other global players like Microsoft Azure. Chinese tech giant Huawei has recently entered the fray, launching its local cloud service in Nigeria in December 2024. Huawei, which has established a strong presence in Nigeria’s banking sector, offering cloud storage and computing services to institutions like UBA, is quickly becoming a formidable contender. In September 2024, TechCabal reported that UBA purchased 200 petabytes of cloud storage from Huawei in a deal valued at $3 million. Huawei’s entry is only adding to the pressure on local providers, who must now compete not just with AWS and Azure but also with a company that has deep relationships within the Nigerian market.
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The burgeoning market opportunities for cross-border payments in Africa
This article was contributed by Osideinde Adewale. COO, Bitnob, Oluwaseyi Otunla, COO OneKard and Nika Naghavi, Deals and Strategic Partnerships Director, Zeps (WorldRemit and Sendwave) as part of the Emerging Trends in Cross-Border Payments: A Growth Guide for Stakeholders report authored by Aroghene Favour Ndulu and Paschal Okeke. E-commerce and digital marketplaces top the list of sectors with the most significant potential for growth in cross-border payments. With more people shopping internationally for better deals, platforms like AliExpress, Shein, and the latest Temu are thriving. They’ve simplified cross-border payments, breaking down barriers for buyers globally, including in Africa. Next is freelancing and remote work, which have reshaped global hiring. US and European companies hire from Africa’s talent pools, driving demand for effective cross border payroll systems. Travel and tourism are also booming. Tourists want payment options that work seamlessly across borders as travel rebounds, avoiding currency conversion headaches. This demand continues to grow as travel becomes more accessible. International Trade. Small and medium-sized enterprises (SMEs) are a major driver of cross-border payments. SMEs sourcing goods internationally rely on cheaper solutions to pay suppliers, especially in China and other global hubs. Addressing the high cost of remittance fees in Africa Remittance fees in Africa often exceed 8-10% of transaction values, far above the global average of 6%. These high costs burden millions who rely on remittances for daily expenses, education, and investments. Companies can address this challenge by focusing on technology, partnerships, and government collaboration. For instance, blockchain-based digital assets such as Bitcoin and stablecoins provide a more cost-effective way to transfer money by reducing traditional processing fees. Platforms like Bitnob enable users to send and receive funds at little to no cost by leveraging digital assets in the background. These platforms offer competitive exchange rates and instantly settle funds to mobile money wallets or bank accounts in the recipient’s local currency. Similarly, digital wallets and mobile money platforms like M-Pesa in Kenya and Paga in Nigeria reduce dependency on banks, allowing funds to be sent directly to recipients. This reduces costs and improves accessibility. Regulatory bottlenecks and high taxes contribute a lot to remittance costs. Companies can work with governments to advocate for reduced transaction taxes, streamlined licensing for money transfer operators, and policies that encourage open financial ecosystems. Serving the underbanked with cross-border solutions Underbanked and rural populations represent a largely untapped market for cross-border payment solutions, especially in emerging regions like Africa. Despite limited access to traditional banking, these communities are becoming active participants in the global economy through remittances, e-commerce, and small-scale trade. To capitalise on their growing economic role, solutions designed for small-scale transactions and local currencies can help reduce barriers, making international payments more accessible and less intimidating with features like dynamic currency conversion and real-time, affordable exchange rates. In regions with limited smartphone penetration, cross-border payments that function via SMS, USSD, or offline modes can further accelerate adoption. Providers can provide uninterrupted service by ensuring transactions auto-complete once connectivity is restored, even in low-tech environments. Complementing these with educational initiatives on currency exchange, digital wallets, and secure transactions builds trust and loyalty. Providers who educate users with knowledge alongside financial services will stand out and drive meaningful financial inclusion in these underserved markets. Infrastructure and cross-border payments Domestic payment rails form the backbone of any cross-border payment journey. Globally, systems like NIBSS (Nigeria Inter-Bank Settlement System) in Nigeria, PIX in Brazil, and UPI in India enable instant local transfers. When these domestic systems are optimised and connected to cross-border networks, they reduce friction, improve speed, and improve reliability. To make cross-border payments accessible for SMEs and underserved populations, domestic rails must support different financial institutions, including banks, fintechs, and mobile money operators. Small businesses risk being excluded from global markets without this foundation, stifling growth. Platforms like Paystack and Flutterwave exemplify how solid domestic systems can connect local merchants to international buyers, unlocking opportunities and bridging gaps between domestic and global economies. This demonstrates that a solid domestic infrastructure is essential for building a thriving cross-border payment ecosystem. The role of partnerships in expanding cross-border payment networks Cross-border payments span different markets, each with unique regulations, cultures, and technologies. In Africa alone, 54 countries use 42 different currencies. Strategic collaborations allow companies to leverage local expertise and infrastructure, helping them efficiently scale their offerings to new markets while navigating complex regulatory ecosystems like anti-money laundering (AML) and Know Your Customer (KYC) requirements. Partnerships also fuel innovation. Banks contribute regulatory knowledge and trust, while fintech brings agility and advanced technology, creating solutions like real-time payments and multi-currency wallets. Moreover, collaborations with global e-commerce platforms improve customer experiences, delivering faster, cheaper, and more transparent payment options. You can read the full report here. __________________ Osideinde Adebisi Adewale is the Chief Operating Officer (COO) at Bitnob, a pioneering fintech company that transforms financial services and cross-border payments across Africa and beyond. With over a decade of experience, Adewale is a dynamic business leader specialising in scaling businesses through strategic planning, innovative product development, operational excellence, and market expansion. Oluwaseyi Otunla, COO OneKard. Seyi is a finance professional with over 3 years of experience in consulting at PwC. BSc in Economics and Management from The University of Kent. Skilled in optimizing processes and delivering impactful results in dynamic, fast-paced environments. Nika Naghavi. Nika is an experienced fintech professional with background in mobile money, digital financial inclusion, and remittances. She has recently joined Zepz to lead strategic partnerships and complex commercial partnerships. Before Zepz, she was at Onafriq (formerly MFS Africa), where she held various roles, including providing strategic advisory support to the Founder and CEO, leading network expansion, and managing the remittances portfolio.
Read MoreSeamlessHR raises $9 million Series-A extension from Gates Foundation and Helios Venture
SeamlessHR, a Nigerian company that helps businesses manage HR functions, has raised a $9 million Series-A extension round, according to three people with knowledge of the conversation. SeamlessHR raised a new round from the Gates Foundation and Helios Digital Ventures. The company raised its $10 million series A in 2022. According to two sources familiar with the company’s operations, the company plans to use the new funding to drive its expansion across Africa, which may include acquisitions. Last year, the company reportedly held talks to acquire one HR tech startup in Nigeria. The company set out to raise $10 million but eventually raised $9 million, according to one person familiar with the conversation who could not named as they were not authorized to speak on the matter. The new round of funding brings SeamlessHR’s total fund raised to about $25 million. The startup raised a $10 million Series A round in 2022 from TLCom, Capria, Lateral Frontiers, Ingressive Capital and Enza Capital. It raised an undisclosed seed round from the same investors and Consonance Investment Managers in 2020. SeamlessHR raised a $150,000 pre-seed round from Tofino Capital and Ventures platform in 2019 “Over the last 5 years, we have expanded across the continent to become the dominant HR and Payroll Software for medium to large enterprises in Africa. While we continue to accelerate our work to optimize workforce productivity in both the public and private sectors across the continent, much of our attention will also be on empowering hardworking Africans with responsible credit products that will help them use their employment as collateral to enjoy a better life,” wrote Emmanuel Okeleji, SeamlessHR’s Co-founder and CEO, in a statement announcing the raise. Founded in 2018, SeamlessHR provides a cloud-based HR software solution that simplifies human resources management. Their comprehensive suite of tools covers everything from core HR functions and performance management to payroll and recruitment. In 2024, they added an e-procurement platform to their product offerings. The company has quickly become one of the leading HR tech providers in Africa, with customers in Nigeria, Ghana, and Tunisia, including renowned brands like PwC, Sterling Bank, and Lagos Business School.
Read MoreYC-backed Waza launches Lync, an alternative to Mercury for African startups after $8m raise
Waza, a YCombinator-backed B2B payments company, has launched Lync, a banking product designed to help businesses manage multi-currency accounts and make international payments. This move comes after Mercury, a San Francisco-based fintech, restricted accounts for startups in 13 African countries in July 2024 following internal compliance changes. The shift has sparked demand for alternatives, and Waza is positioning itself as a key player in this market alongside other companies like Raenest, Leatherback, and Vesti. Lync enables businesses to receive money and make payments in over 100 countries, supporting multiple currencies, including USD, EUR, GBP, NGN, and stablecoins. Unlike competitors that rely on wallet-based systems (where transactions are processed under the company’s name rather than the customer’s), Lync offers full banking access. This makes it easier for businesses to reconcile payments, as funds are processed under their accounts. Waza co-founder and CEO Maxwell Obi, highlighted that Lync’s comprehensive banking capabilities—such as ACH, Fedwire, SWIFT, and local payment rails like the UK’s Faster Payments—allow companies with global operations to handle payments and foreign exchange liquidity from a single platform. Additionally, the company plans to offer trade financing services within the app, including pre-shipment financing and invoice financing, which are essential for businesses engaged in international trade. Lync is Waza’s second product after and comes on the back of Waza’s $8 million raise in 2024, funding it says will support market expansion and new product development. One of Lync’s major selling points is its affordable transaction fees. According to Obi, Waza’s years of experience in the fintech space have allowed the company to secure competitive FX rates for its customers. Unlike many competitors, Waza has more control over its payment infrastructure, allowing it to offer lower transaction costs and faster settlement speeds. Our value proposition has always been about affordability and the speed of settlement, Obi said in a recent interview with TechCrunch. He added, “By maintaining more control over our infrastructure, we can provide cheaper and faster solutions than the competition.” The new web app allows businesses to make payments in over 100 countries with multi-currency accounts in dollars, euros, Pounds, Naira, and stablecoins. Obi claims the accounts offer full banking features, including ACH, Fedwire, SWIFT, and local rails like the UK’s Faster Payments, enabling companies with global operations to manage payments and FX liquidity from a single platform. The startup will also offer trade financing services on the Lync app, like pre-shipment and invoice financing.
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TechCabal Daily – CMC Motors steers out of East Africa
In partnership with Lire en Français اقرأ هذا باللغة العربية Good morning Welcome back from the weekend; here’s some global news for you., TikTok is back online in the US after a whirlwind weekend during which the app went dark following a federal ban. Hours after the shutdown, President-elect Donald Trump—set to be inaugurated later today—announced plans for an executive order delaying the ban to give TikTok’s parent company, ByteDance, more time to find an approved buyer. By Sunday afternoon, the platform restored service, thanking users and Trump for their support. In Africa, some countries have been debating measures to regulate TikTok. Kenya, for example, recently opted to require social media companies to establish physical offices rather than imposing a partial ban. This reflects a growing demand for greater accountability from global tech platforms. A US ban, however, could shift this dynamic. Kenya’s push for local offices may gain urgency, with a potential ban emerging as a powerful enforcement tool if platforms like TikTok fail to comply. As concerns about misinformation, data privacy, and content regulation grow, the US decision could set a precedent for how nations handle global tech giants. Nigeria joins BRICS as a partner country CMC Motors shuts down operations in East Africa What’s behind Egypt’s inflation slowdown? World Wide Web 3 Events Economy Nigeria joins BRICS as a partner country Image Source: Netflix Nigeria is joining a different league. Last week, the country was admitted as a “partner country” of the BRICS bloc of developing economies. Established in 2009, BRICS—an acronym for Brazil, Russia, India, China, and South Africa—aims to serve as a counterbalance to the Group of Seven (G7) leading industrialised nations, which include the United States, Canada, United Kingdom, France, Germany, Italy, and Japan. While Nigeria’s “partner country” status doesn’t equate to full membership, it opens up avenues for deeper economic cooperation, increased trade opportunities, and access to BRICS-backed initiatives like the New Development Bank, a lending institution modelled after the World Bank, which has approved nearly $33 billion in loans since its inception in 2015. It also reinforces the bloc’s aim to include voices from the Global South in shaping a multipolar world order. Nigeria’s admission as a partner country in BRICS comes at a pivotal moment as the bloc seeks to expand its influence by including major fossil-fuel-producing nations. This move aligns with BRICS’ broader strategy to challenge the dollar’s dominance in global oil and gas trading by promoting the use of alternative currencies. Nigeria’s inclusion in the bloc may enable the West African country to tap into BRICS’ financial resources, including the $100 billion liquidity facility established in 2016 to support member nations during economic distress. With China as Nigeria’s largest creditor, holding $4.34 billion of Nigeria’s external debt as of 2023, this new partnership with BRICS could also provide alternative funding options for Nigeria. Collect payments Fincra anytime anywhere Are you dealing with the complexities of collecting payments in NGN, GHS or KES? Fincra’s payment gateway makes it easy to accept payments via cards, bank transfers, virtual accounts and mobile money. Get started now. Companies CMC Motors shuts down operations in East Africa Image source: CMC CMC Motors Group, one of East Africa’s top vehicle distributors for over 60 years, is closing its doors in Kenya, Uganda, and Tanzania. The company announced its shutdown on January 17 citing mounting operational costs, currency depreciation, and the loss of critical vehicle franchises as factors. CMC entered East Africa—starting with Kenya—in 1948, and went public in 1956, showing a strong market reception. It followed that by expanding into Uganda in 1960 and Tanzania later in 2007. The mobility company built a reputation by distributing global automotive giants like Ford, Volkswagen, Jaguar, and Land Rover, becoming a household name in East Africa. For years, it was the go-to provider of reliable vehicles and equipment across the region. But over the past decade, the company faced growing challenges. In 2014, Dubai-based Al-Futtaim Group acquired CMC in an $86 million deal, delisting it from the Nairobi Securities Exchange (NSE). Despite restructuring attempts, the company could not escape setbacks, notably the loss of car franchises. The most notable blow came in 2023, when CMC lost the Ford dealership to competitor Salvador Caetano, following the earlier exit of Jaguar, Land Rover, and Volkswagen. Shortly after, it laid off 169 employees to reduce overhead costs. The layoffs didn’t slow down the company’s problems as vehicle import costs also soared and the regional economy slowed further crippling CMC’s numbers. The company’s shutdown will result in at least 200 job losses across East Africa. After Mobius Motors, CMC becomes the second recognisable mobility brand to exit East Africa in the last six months. While Mobius remains in talks for an acquisition, the future for CMC looks set—down and out. Economy What’s behind Egypt’s inflation slowdown? The Central Bank Of Egypt Egypt’s headline inflation eased to 24.1% in December 2024, down from 25.5% in November, marking its lowest level since December 2022. This slowdown was driven largely by a sharp drop in food inflation, particularly for fresh vegetables, while core inflation (excluding food and energy) also edged down to 23.2% from 23.7%. December marked the third consecutive month of declining inflation, signalling some improvement. However, costs for services like rent, internet, and dining continued to rise. Despite inflation remaining well above target, the Central Bank of Egypt maintained interest rates during its December 26 meeting, extending a pause that began in March 2022 after cumulative hikes of 1,900 basis points. Egypt’s economy is in a tough spot. The rates have not been this high since 2017 when it experienced an economic slowdown. Non-food sectors and commodities like fuel are still driving price increases, putting pressure on Egypt’s economy. Without seasonal declines in food prices, headline inflation would likely have stayed higher, as food remains a major contributor to overall inflation. While the temporary relief from lower food prices offers some respite, challenges in housing and services could reignite inflationary pressures. The
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TechCabal Daily – The long road to Nigeria’s fiber optic dream
In partnership with Lire en Français اقرأ هذا باللغة العربية TGIF It’s about that time when we ask you to go to the bottom of the newsletter and tell us how we’ve done with TC Daily this week. If you loved the editions, let us know by clicking “Loved It!” and if you think there’s something we can do better, let us know! Kenya wants social media platforms to have boots on the ground Who pays the price in the bank vs telco USSD face-off? World Bank pledges $500 million to Nigeria’s 90,000km fibre project Funding tracker World Wide Web 3 Events Regulation Kenya wants social media platforms to have boots on the ground Kenyan president HE William Ruto The hashtag #RejectFinanceBill2024 amassed over 6 million tweets during Kenya’s protests against the proposed finance bill in 2024. The bill, which sought to increase taxes across the board, sparked widespread public outrage. Kenyans relied heavily on social media to mobilize against the bill, sharing videos, photos, memes, and live streams, while also disseminating lawmakers’ and IMF officials’ contact details. This pressure, combined with mass protests across cities and towns, ultimately led to the bill being scrapped. In the wake of these events, the Kenyan government is pushing for tighter regulation of social media platforms, including a requirement for them to establish local offices. Officials argue that having a local presence would allow for better oversight, improve collaboration in tackling issues like cyberbullying, hate speech, and incitement to violence, and ensure platforms comply with tax and labour regulations. Proponents also highlight that such measures are increasingly standard in many countries, where local offices facilitate quicker responses to legal requests and help platforms tailor content moderation policies to local contexts. However, critics fear the move could give the government with greater control over social media, enabling censorship and stifling dissent. The precedent set by Nigeria offers a cautionary tale. In 2021, the Nigerian government blocked Twitter after it deleted a tweet by President Muhammadu Buhari for violating its policies. Twitter had become a key platform for political organising, especially during the #EndSARS protests. The ban was only lifted in 2022 after Twitter agreed to several conditions, including opening a local office, registering as a broadcaster, and adhering to national security guidelines. Many viewed these requirements as attempts to limit the platform’s role in facilitating political activism. Kenya now faces a similar balancing act: while addressing legitimate concerns around online harm and compliance, the government must also ensure its actions do not inadvertently suppress free expression or political dissent. Collect payments Fincra anytime anywhere Are you dealing with the complexities of collecting payments in NGN, GHS or KES? Fincra’s payment gateway makes it easy to accept payments via cards, bank transfers, virtual accounts and mobile money. Get started now. Banking Who pays the price in the bank vs telco USSD face-off? Image source: Faith Omoniyi/ TechCabal The Nigerian Communications Commission (NCC), the country’s communications regulator, has given telecom companies the go-ahead to cut off USSD services for nine banks over unpaid debts by January 27, 2025. The commercial banks are Fidelity Bank, First City Monument Bank, Jaiz Bank, Polaris Bank, Sterling Bank, United Bank for Africa, Unity Bank, Wema Bank, and Zenith Bank. Since 2019, banks have accumulated debts owed to telcos for USSD services. In November 2024, this amount reached ₦250 billion ($160 billion). Multiple lobbying by telcos has forced the NCC and other regulators to investigate the matter. With joint efforts with the Central Bank of Nigeria (CBN), the NCC has tried to rein in banks. In September 2024, it instructed banks to pay off their debts, but some refused to comply. As a result, the NCC and CBN issued a joint circular on December 20, 2024, stating that banks that refused to settle their debts by January 27, 2025, would be locked out of the USSD service, possibly shutting off millions of Nigerian retail banking customers—who use USSD for everyday banking—from critical mobile banking services. USSD is especially important for older Nigerians and people in rural areas who rely on basic phones without internet access. If banks end up clearing their debt to telcos, the NCC plans to transition to using an end-user billing process where customers pay telcos directly for USSD services, bypassing banks—which seem to want no part of it—in the future. While this will curb any debt issue, it raises questions about how this process will work and how much financial information, if any, will be shared with telcos. Internet World Bank pledges $500 million to Nigeria’s 90,000km fibre project Minister of Communications, Technology, and Innovation Bosun Tijani The World Bank has pledged $500 million to Nigeria’s ambitious 90,000km fibre optic project by Q3 2025. This contribution, while significant, covers only part of the $3.2 billion required for the project. On Tuesday, the US signed a $2 million grant. At the same time, a coalition of development finance institutions (DFIs), including the Islamic Development Bank and the African Development Bank, have also expressed financial commitment. Since taking office, Minister of Communications, Technology, and Innovation Bosun Tijani has prioritised building a national fibre backbone to extend high-speed internet access, particularly to underserved rural areas. Expanding the network to 125,000km would address longstanding infrastructure gaps and improve digital connectivity across the country. The ministry has continued attracting financial backers, showing growing confidence in the ambitious fibre project. However, these pledges remain theoretical. Without solid proof-of-work, it could stall momentum. Another key area Minister Tijani still has to address is the fragmented state policies around the implementation of the backbone project, as well as the alignment of telcos, government, and other parties involved. The funding commitments are a progressive sign, but whether Nigeria and Minster Tijani can reach their goals will depend on resolving these micro issues. Given the funding momentum, it is hard to bet against the success of the project—but not necessarily on the time it would take for Nigeria to achieve this. Initially a two-year project, it
Read MoreBreaking: Kenya wants social media companies to set up physical offices
Kenya will now require social media companies to set up physical offices in the country, the Ministry of Interior and National Administration said on Thursday after a meeting with stakeholders in the telecommunication and social media sectors. This move suggests tighter social media regulation in the East African country. “(We) arrived at a consensus on the need to curb misuse of technology and social media, including harassment, hate speech and incitement to violence, including enhancing physical presence of key operators,” the ministry said in a statement. The call to regulate social media comes six months after young people in Kenyan led widespread protests against President William Ruto’s administration over the now-withdrawn 2024 Finance Bill which introduced new taxes on essential commodities such as edible oil and sanitary pads. Social media platforms like TikTok and X played a crucial role in amplifying the protests, allowing Kenyans to livestream demonstrations to a wider audience beyond the physical locations. The hashtag #RejectTheFinanceBill2024, gained traction on X, with over 4 million impressions in the first few days of the protests. Tens of Kenyans lost their lives during the demonstrations, believed to be the longest-running protest in the country’s history. While subsequent protests were less intense than those in July 2024, Kenyans have turned to social media platforms, particularly X, to voice their frustrations with the government over cost of living and economic hardship. Some citizens used AI tools to create provocative images, some of which politicians called offensive. One of the most controversial trends featured images of Ruto depicted in a coffin. During Thursday’s meeting, Principal Secretary for Internal Security Raymond Omollo addressed concerns over social media misuse. Despite being one of the few African countries where citizens widely use social media without restrictions, over 80 abductions have allegedly targeted online government critics since June 2024.
Read MoreEmerging trends and future outlook for cross-border payments in Africa
This article was contributed by Dickson Nsofor, CEO Kora, and Solomon Amadi, SVP of Payments at Moniepoint as part of the Emerging Trends in Cross-Border Payments: A Growth Guide for Stakeholders report authored by Aroghene Ndulu and Paschal Okeke. The “Japa” trend is one of the significant drivers of cross-border payments at the moment. With more people moving abroad, especially to the Western world, there’s a growing need to send and receive money back home. Another key trend shaping the cross border payments ecosystem in Africa is the rise of mobile money platforms like M-Pesa and Momo, which are helping unbanked populations send and receive payments across borders. Nigeria’s economy is also pushing businesses to look beyond local markets. FX gains are becoming more appealing, and earning in stronger currencies is now a priority. Exporters, for example, ship goods to other African countries and beyond, while importers bring in funds. This has increased the demand for cross-border payment systems that handle these transactions. For businesses, operating across borders isn’t just about trade; it’s a way to grow. Expanding internationally gives them access to new customers and more revenue opportunities. Fintech companies are stepping up with APl-driven platforms that provide cheaper and more efficient payment solutions, disrupting the traditional banking model. And let’s face it, a business that can succeed in multiple markets is far more attractive to investors. How is blockchain impacting cross-border payment solutions on the continent? Blockchain technology is still in its early stages regarding cross-border payments in Nigeria and much of Africa. A few local companies, like Zone, are experimenting with blockchain to facilitate transactions, but the overall impact on cross-border payments is minimal. The reasons are clear: adoption and penetration are low due to regulatory uncertainties, negative perceptions, and a lack of widespread advocacy for blockchain-driven solutions. Blockchain is making cross-border payments in Africa faster, cheaper, and more secure. In the past, payments had to go through multiple banks and intermediaries, which caused delays and extra fees. But with blockchain, transactions happen directly between two parties in real-time, eliminating the need for these intermediaries. This is a big deal for African businesses and individuals who rely on fast and affordable payments. Plus, blockchain keeps every transaction on a secure, tamper-proof ledger, which makes fraud much harder. Over time, blockchain will help African countries rely less on foreign currencies and make it easier to trade using local currencies. The role of mobile money Mobile money has transformed access to financial services for people without traditional banking, allowing them to send and receive money directly through their phones. This has brought millions into the financial system. However, its impact varies across countries due to differing regulations. For example, in Kenya, M-PESA allows telcos to store customer funds, which makes them integral to the financial ecosystem. But this comes with risks; if a platform like Safaricom’s M-PESA were to face disruptions, it could cripple Kenya’s economy. On the other hand, Nigeria has taken a more cautious approach, with regulations that prevent telcos from storing funds. This helps avoid over-dependence on any single platform and safeguards competition from fintechs. Intra-African payments are another area where mobile money plays an important role. It can facilitate cross-border transfers, but issues like transaction limits, payment tracking, and data privacy must be regulated first. Telcos collect extensive user data, which could create an unfair advantage if left unchecked. Ultimately, mobile money simplifies transactions and ensures people can send and receive money effortlessly. While it’s unlikely to dominate Nigeria’s financial system the way M-PESA does in Kenya, it will remain a vital transaction option. For customers, the priority is convenience, whether through telcos, banks, or fintech. The goal is to make payments faster, safer, and more accessible. AfCFTA and cross-border payments African cross-border payments will change significantly under the African Continental Free Trade Area (AfCFTA). The agreement opens the door to a more extensive customer base and growth opportunities for businesses already in the payments space. It also encourages the use of local African currencies, which could reduce Africa’s heavy reliance on international currencies like the US dollar. However, If we can develop systems to exchange African currencies directly, without the restrictions many African countries currently face, we could see significant innovations in how payments are made across Africa. This shift could also help stabilise and increase the value of local currencies by creating more demand for them in regional trade. The ultimate goal is to make cross-border payments more manageable and reduce dependency on foreign currencies, which can weigh down trade due to currency conversion costs and rate fluctuations. If it works as intended, AfCFTA will simplify trade and boost intra-African commerce and innovation in the payments ecosystem. Future innovations Al will play a huge role in shaping the future of payments in Africa. With advanced fraud detection and smarter risk management systems, transactions are likely to become faster and more secure. Digital currencies, including cryptocurrencies and central bank digital currencies (CBDCs), also have the potential to reduce transaction costs and speed up cross-border payments by cutting out the need for foreign exchange. Contactless payments will transform how people pay in Africa in the next few years. Imagine being able to use your Nigerian card in Morocco without any hassle. That’s the kind of simplicity we need. The rise of virtual cards will help push this forward. They’re cheaper to get, you don’t have to worry about losing them, and they’ll make payments faster and more secure. Pair that with contactless technology, making it much easier for people to pay without thinking twice. You can download the full report here. _________ Dickson Nsofor is the founder and CEO of Kora, a pan-African payment infrastructure company established in 2017. He has over a decade of experience in Internet and mobile technology companies, where he honed his skills in IT, business analysis, and project management. He has contributed to organisations such as the United Nations and Humaniq, focusing on improving processes and implementing innovative solutions
Read MoreTechCabal Daily – The future of Kenyan banking….is expensive
In today’s edition: A new payment system could cost Kenya up to $200 million || NBS returns, bringing new inflation metrics and a complex outlook || Geely, Auto Mobility target 30,000 car sales in 2025
Read MoreSafaricom, Kenyan banks claim Central Bank’s new payment system could cost $200m
Safaricom and Kenyan commercial banks claim the Central Bank’s (CBK) plan to build a fast payment system (FPS) could cost at least $200 million (KES25.9 billion) and take up to four years to complete. The FPS aims to enhance interoperability across the payments landscape and reduce transaction costs, but Safaricom and the Kenyan Bankers Association (KBA) argue that it could duplicate existing infrastructure and lead to inefficiencies that could slow innovation in Kenya’s financial sector. In their joint report, Safaricom and the Kenya Bankers Association (KBA) recommended that the CBK should instead enhance existing payment systems such as Pesalink—already used for peer-to-peer payments between banks—rather than creating a costly new system from scratch. While acknowledging the potential benefits of FPS, both organisations question the $200 million price tag and lengthy timeline. A key concern raised by KBA and Safaricom is the Special Purpose Vehicle (SPV) proposed to manage and operate the FPS. The SPV would be owned by the CBK (60%), Safaricom (20%), and commercial banks (20%). It would require legislative amendments, including amendments to the Central Bank of Kenya Act, the National Payment Systems Act, the National Payment Systems Regulations of 2014, the e-money Regulations of 2013 and an initial investment of $30 million. The proposed SPV structure would make the FPS a state-owned enterprise under the CBK’s majority control. According to the report, this could introduce bureaucratic delays, slowing innovation. “The creation of an SPV may mean that streamlining regulations that would deliver immediate benefits within the current payment landscape may be delayed until the SPV and FPS are operationalised,” the proposal said. While the CBK has not disclosed whether it will pursue the SPV model or upgrade existing infrastructure like Pesalink or M-Pesa, Safaricom and the KBA suggest enhancing existing infrastructure is a cheaper, timely option. The CBK did not respond to multiple requests for comments. Not suitable for mobile money market Another significant concern is the mobile market in Kenya, one of the most advanced in the world. Platforms like M-Pesa and Airtel Money dominate the landscape, reporting billions of dollars in transaction value annually. According to Safaricom and the KBA, the proposed FPS model may not be suited to a mobile money-oriented market. “It is a high-risk approach as it is an unproven model in a market where payments are predominantly digital and mobile-based. Most FPS implementations from other markets started when cash and/or card payments were dominant,” said the Safaricom and KBA report. While the report does not address the views of other payment service providers (PSPs), Safaricom and KBA advocated upgrading existing payment systems, a model adopted by Zimbabwe. This would mean designating an existing system, such as M-Pesa or Pesalink, as the primary operator of the FPS. Instead of creating a new system, Safaricom and KBA propose broadening the ownership of the existing system to include CBK and other payment service providers, SACCOs, micro-finance banks, and other players who may wish to take a direct stake. Whatever the route CBK takes, payment experts believe that the FPS will lower transaction costs and ease funds transfer across different platforms. “It will create opportunities for smaller players but could also raise entry barriers for them. It will drive innovation in Kenya’s payments industry, with both small and large service providers pushed to offer better solutions,” said Alfred Ongere, former Payless Africa chief technology officer. The existing payment infrastructure is fragmented, with mobile money platforms operating in silos from other financial institutions. Banks, Saving and Credit Cooperative Organisations (SACCOs) and other payment providers need separate agreements to plug into mobile platforms like M-Pesa and Airtel Money. At the moment, Pesalink only caters to banks, locking out other financial institutions. The CBK is expected to issue further guidelines in the coming months. However, the debate over an optimal payment system highlights the delicate balance to maintain Kenya’s progress in mobile and digital payments. .
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