Why Is It So Difficult to Move Money Around Africa?
Moving money across African borders remains slow, expensive, and complicated for many individuals and businesses. This reality affects trade, remittances, investment, and everyday economic activity across a continent with 54 countries, diverse financial systems, and significant potential for integration. While mobile money has transformed domestic payments in several nations and new initiatives seek to improve cross-border flows, structural barriers continue to limit efficiency. Understanding these challenges reveals why progress has been gradual and highlights ongoing efforts to address them through technology, regulation, and regional cooperation.
Paying the Premium: The High Cost of Transfers
Cross-border money transfers in Africa are among the most expensive in the world. Sub-Saharan Africa consistently records the highest average remittance costs globally. According to World Bank Remittance Prices Worldwide data, the average cost of sending $200 to the region stood at approximately 8.4% in recent quarters, compared with a global average of around 6.2%.
Costs vary sharply by corridor and amount. Intra-African routes often prove particularly expensive. For example, the Tanzania to Uganda corridor has recorded average costs as high as 61% in some periods, while sending money from Senegal to Mali has averaged around 25.7%. Transfers from South Africa to Malawi have reached 17% to 19%, and routes involving South Africa to Zimbabwe have averaged about 13.18% after gradual reductions over a decade. Other notable high-cost examples include corridors originating in Nigeria or Kenya, where fees and foreign-exchange margins frequently exceed 12% to 15% for smaller amounts. These figures remain well above the United Nations Sustainable Development Goal target of 3%.
Several factors drive these elevated costs. Multiple intermediaries in traditional correspondent banking chains each add fees and margins. Foreign-exchange spreads widen when transactions route through the US dollar or euro because of limited direct local-currency liquidity. Flat charges disproportionately affect smaller transfers typical of remittances and small-business payments. As a result, recipients receive less, and many people turn to informal channels, which carry their own risks and lack consumer protections.
High costs also reduce the incentive to use formal systems. For migrants sending money home, these expenses erode the value of hard-earned wages and limit the developmental impact of remittances. In high-cost corridors, switching from frequent small transfers to fewer larger ones can produce meaningful savings, yet limited awareness and access often prevent such optimisation.
A Patchwork of Rules: Fragmented Regulations and Compliance Barriers
Africa’s regulatory environment is highly fragmented. Each of the 54 countries maintains its own licensing requirements, anti-money laundering rules, capital controls, foreign-exchange restrictions, and reporting obligations. Providers wishing to operate across borders must navigate differing standards, often securing separate licences in every jurisdiction. This process can take 12 to 24 months per country and significantly raises operational expenses.
Capital controls in several nations restrict outward transfers or require prior approvals, while know-your-customer and data-protection standards vary widely. These differences complicate compliance for banks and fintech companies seeking to scale continent-wide services. The lack of harmonisation also slows innovation and increases the risk of regulatory arbitrage or non-compliance.
Experts have called for greater coordination, including proposals for a continent-wide Payment Service Directive to standardise rules and enable smoother instant cross-border payments. Without such alignment, regulatory fragmentation will continue to act as a brake on efficiency and integration, particularly as the African Continental Free Trade Area seeks to boost intra-African commerce. Differing foreign-exchange regimes further compound the issue, as some countries ration hard-currency access while others maintain more liberal policies.
Gaps in the System: Limited Financial Infrastructure and Access
Financial infrastructure differs markedly across the continent. Account ownership in sub-Saharan Africa has risen steadily thanks to mobile-money growth, reaching around 58% of adults in recent data. Yet substantial gaps remain, especially in rural areas and among lower-income groups. In some countries, ownership rates fall below 20%, such as in Niger or Chad, while leaders like Kenya and Mauritius exceed 89% to 90%.
Mobile-money platforms, pioneered in places such as Kenya, have improved domestic access for millions. However, extending these systems seamlessly across borders encounters technical and regulatory obstacles. Last-mile delivery often relies on physical agents or branches, which are scarce outside urban centres. Interoperability between national payment systems stays limited, forcing many transfers through correspondent banks or manual processes.
Unreliable electricity and internet connectivity in parts of the continent further complicate digital solutions. These infrastructure shortfalls mean that even when digital options exist, many users, particularly in remote locations, continue to depend on cash or informal networks. Urban-rural divides are pronounced, with formal account usage significantly higher in cities than in countryside areas.
The Currency Puzzle: Fragmentation and Foreign-Exchange Challenges
Africa is home to more than 40 distinct currencies, many of which have limited liquidity beyond their home markets. This fragmentation forces most cross-border transactions to route through intermediary currencies such as the US dollar or euro. The process introduces exchange-rate volatility, additional conversion costs, and delays caused by liquidity shortages in certain currency pairs.
Foreign-currency shortages and capital controls in several countries exacerbate the problem. Central banks sometimes ration hard-currency access, leading to queues, black-market premiums, and uncertainty for businesses. Volatile exchange rates, influenced by external shocks, inflation, and trade imbalances, add further risk and cost to payments.
Direct local-currency settlement between many African pairs remains rare because of low trading volumes and underdeveloped markets. These currency challenges increase both the expense and unpredictability of moving money, especially for intra-African trade that would benefit from simpler, cheaper settlement options. The reliance on offshore clearance in major currencies also contributes to annual losses estimated in the billions of dollars across the continent.
The Long Wait: Slow Processing and Reliance on Intermediaries
Traditional bank transfers across African borders frequently take several days to complete. Multiple verification steps, compliance checks, and correspondent banking relationships contribute to these delays. Global banks have reduced some African correspondent links in response to heightened risk and compliance costs, further constraining efficient channels.
The reliance on intermediaries creates opacity and additional fees at each step. Senders and recipients often lack real-time visibility into the status or final amount received. While digital innovations have accelerated some domestic payments, cross-border processes have lagged, particularly for retail and smaller-value transfers.
These delays affect businesses needing to pay suppliers, families relying on timely remittances, and traders seeking to capitalise on market opportunities. In a region where speed can determine competitiveness, slow settlement represents a meaningful economic drag. The combination of processing times and intermediary layers also heightens exposure to currency fluctuations during the transfer period.
Lights at the End of the Tunnel: Regional Initiatives Aiming to Improve Efficiency
Efforts to overcome these barriers are gaining momentum. The African Continental Free Trade Area has underscored the importance of efficient payment systems to support expanded intra-African trade. In response, the Pan-African Payment and Settlement System (PAPSS) was launched in 2022 by the African Union, Afreximbank, and the AfCFTA Secretariat.
PAPSS enables near-instant transfers in local currencies between participating countries. It connects central banks, commercial banks, and payment providers with the aim of reducing costs, accelerating settlement, and minimising reliance on foreign intermediaries. As of 2025, the network had expanded to 19 countries across four regions, with over 150 commercial banks and 14 payment switches connected. Average processing times stand at around seven seconds, with reported cost savings of up to 90% in active corridors.
Rollout continues, with new participants joining regularly. Fintech companies are expanding digital options, and some regional blocs are advancing harmonisation of payment rules. Complementary products, such as co-branded cards and partnerships with national switches, are broadening accessibility. While full continent-wide coverage will take time, PAPSS and similar initiatives represent concrete steps toward greater financial integration and efficiency.
The Crypto Alternative: Digital Currencies and Blockchain Innovations
Crypto and blockchain technology have emerged as a practical workaround for many of the barriers outlined above. High costs, slow processing, currency controls, and limited access have driven rapid adoption across sub-Saharan Africa. Between July 2024 and June 2025, the region recorded more than $205 billion in on-chain value, a 52% year-on-year increase that ranks it among the fastest-growing crypto markets globally.
Stablecoins, which maintain a steady value pegged to major currencies, now represent roughly 43% of crypto transaction volume in the region. They deliver clear advantages for cross-border transfers. Stablecoin remittances can cut costs by up to 60% compared with traditional channels for a $200 transfer, with some real-world pilots reducing fees from as high as 29% to around 2%. Transactions typically settle in seconds rather than days, bypassing correspondent banks, foreign-exchange conversions, and many regulatory frictions.
Nigeria and Kenya feature among the leading adopters, with Nigeria consistently showing high transaction volumes used for remittances, trade settlements, and hedging against inflation and currency volatility. Peer-to-peer platforms and mobile-integrated services have extended access to unbanked populations, making crypto a lifeline for families receiving remittances and businesses managing cross-border payments.
Regulatory environments remain fragmented, however. Some countries have adopted progressive frameworks, while others maintain restrictions or outright bans. Additional challenges include price volatility in non-stable assets, money-laundering risks, and varying levels of digital infrastructure and literacy. Despite these issues, crypto continues to provide faster, cheaper, and more inclusive options where traditional systems fall short.
The Bigger Picture: Broader Implications
Inefficient cross-border payments constrain intra-African trade, raise operating costs for small and medium-sized enterprises, and diminish the impact of remittances that support millions of households. Remittance inflows to sub-Saharan Africa have grown substantially, reaching estimates of around $58 billion in recent years, yet high fees mean a significant portion never reaches recipients.
These frictions also slow the realisation of broader regional goals under the AfCFTA. Improved payment systems could unlock substantial economic gains by lowering transaction costs, speeding trade, and encouraging formal economic activity. Targeted reforms, infrastructure investment, regulatory harmonisation, and wider adoption of systems such as PAPSS will be essential.
While longstanding obstacles persist, recent data and developments indicate gradual progress. Continued collaboration among governments, central banks, financial institutions, and technology providers is needed to make moving money around Africa simpler, cheaper, and more reliable.
Risk Disclosure
Trading or investing in crypto assets is risky and may result in the loss of capital as the value may fluctuate. VALR (Pty) Ltd is a licensed financial services provider (FSP #53308).
Disclaimer: Views expressed in this article are the personal views of the author and should not form the basis for making investment decisions, nor be construed as a recommendation or advice to engage in investment transactions.
