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The Transformative Power Of Instant Payments In Africa’s Economy
![Africa’s financial services landscape is undergoing digital transformation, and at the heart of this shift is the rise of Instant Payment Systems (IPS). [Photo: Courtesy]](https://cioafrica.co/wp-content/uploads/2025/01/Instant-Payments-2.jpg)
Africa’s financial services landscape is undergoing digital transformation, and at the heart of this shift is the rise of Instant Payment Systems (IPS). According to the State of Inclusive Instant Payment Systems (SIIPS) in Africa 2024 report, instant payment systems (IPS transaction volumes have surged by 37 percent, and transaction values have risen by 39 percent over the past five years. These figures represent substantial progress in the adoption of digital payments across the continent.
This growth is driven by several factors including entrenched IPS usage in countries like Egypt, Ghana, Kenya, Nigeria, and Uganda which have all played a pivotal role. Additionally, the growing interoperability of IPS across the continent has been instrumental in enabling seamless transactions between various systems.
CIO Africa spoke to experts from the AfricaNenda Foundation, who produced the State of Inclusive Instant Payment Systems (SIIPS) in Africa 2024 report.
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“Enabling factors such as IPS business models and technical choices have further promoted end-user adoption. These systems are designed to provide affordable, user-friendly services that foster trust in the ecosystem. The report highlights that all 31 IPS on the continent support peer-to-peer (P2P) payments, with many expanding to include person-to-business (P2B) and business-to-business (B2B) transactions. However, government-to-person (G2P) payments remain underutilized, with only six systems supporting this use case,” said Serge Moungnanou, Partnership, Advocacy, and Capacity Building Specialist, at the AfricaNenda Foundation.
Interoperability remains a key focus area for regulators. Countries like Angola, Malawi, Zimbabwe, and the CEMAC region have issued regulations mandating interoperability between providers.
“All-to-all interoperability is an essential criterion of inclusive systems. For an IPS, it means that the system supports transactions across Payment Service Providers (PSP) and between accounts and wallets, unveiling the cross-domain type of IPS. Interoperability brings greater potential for scale, and for the system to benefit everyone,” said Sabine Mensah, the Deputy CEO, at the AfricaNenda Foundation.
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Additionally, cross-domain systems are gaining popularity, with nine new systems launched since 2020, bringing the total to 14. These advancements indicate that the inclusivity of IPS and accessibility are improving, laying a foundation for sustainable growth.
To maintain this momentum, the SIIPS report recommends focusing on near-term inclusivity gains, such as unlocking further use cases and enabling end-user recourse mechanisms . Governments can also drive adoption by mandating digital payments for specific use cases and digitalizing social transfers and grants.
Challenges in Financial Inclusion
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Despite promising growth, significant barriers remain, particularly for vulnerable groups. The SIIPS report highlights that limited internet access and the lack of mobile phones are major obstacles. For instance, in Uganda, the reliance on internet-based digital payments excludes non-users during service downtimes. In Ethiopia, the dominance of app-based payment systems limits access for those without smartphones, exacerbating financial exclusion.
Language and affordability further compound the challenges. Many vulnerable groups face difficulties navigating digital payment interfaces due to language barriers or the high costs associated with smartphones and internet connectivity. Although smartphone penetration is increasing, 49 percent of mobile phone connections in 2022 were via basic or feature phones. This underscores the untapped potential of enabling Unstructured Supplementary Service Data (USSD) channels, which can provide affordable access but pose security risks.
Fraud is another persistent issue. Vulnerable end-users, particularly women in rural areas, are disproportionately affected. The SIIPS in Africa 2024 report notes that fraud has grown at an alarming rate, outpacing the growth of mobile transactions. Addressing this requires robust Know Your Customer (KYC) processes, enhanced security features like two-factor authentication, and increased end-user awareness. Quick consumer recourse mechanisms are also essential to rebuild trust when fraud occurs.
“Across all countries, except for Ethiopia, surveyed for the SIIPS in Africa 2024 report, a large share of respondents hesitate to share their personal data with payment service providers (PSPs) due to data privacy concerns. This keeps them from registering for digital payment services. In Guinea, respondents worry that the government will monitor their transactions but are also concerned about fraudsters accessing their information,” remarked Jacqueline Jumah, Director of Advocacy & Development, at the AfricaNenda Foundation.
Generally, data privacy concerns deter many from adopting digital payments. Across surveyed countries, apprehensions about government surveillance, fraud, and data misuse are common. To address these issues, the report advocates for robust data governance frameworks and the adoption of regional or national strategies to protect user data.
By addressing these challenges head-on, IPS stakeholders can ensure that Africa’s financial services ecosystem becomes more inclusive.