Pioneering The Journey Toward Inclusive Instant Payments Across Africa

Financial inclusion in Africa is at a critical juncture, where the promise of instant payments—quick, secure, and low-cost digital transactions—has the potential to uplift millions. In the third annual “State of Inclusive Instant Payment Systems (SIIPS) in Africa 2024” report, Africa  Nenda provides a comprehensive look at the current state of instant payments across the continent. The data-driven analysis sheds light on the achievements, challenges, and opportunities that lie ahead in the push to make digital payments accessible to all Africans.

Account ownership is often the first step towards financial independence, offering a platform to make and receive digital payments securely. Accounts provide a cushion against financial shocks and enable seamless transactions between geographically dispersed networks. However, the economic benefits of digital payments extend beyond the 55% of Africans who are currently financially included. For the 45%—over 400 million adults—who remain unbanked, digital payments can be transformative. Yet, significant barriers remain, from patchy geographical coverage to issues of affordability and accessibility.

The 2024 SIIPS report is a product of extensive research, including data collection from central banks, public-private partnerships, and stakeholder interviews. Insights were drawn from case studies in countries like Mauritius, South Africa, Tanzania, and Zimbabwe, and supplemented by field research in Algeria, Ethiopia, Guinea, and Uganda. These insights collectively paint a picture of a continent in flux, striving to create a payments ecosystem that is inclusive and effective.

An instant payment system (IPS) facilitates quick, irrevocable digital transactions, operating around the clock. Yet, for a payment system to be truly inclusive, it must support a wide range of use cases—enabling not just person-to-person payments but also transactions involving businesses and governments. Inclusivity also implies that all licensed providers have fair access to the system, with the central bank playing a key regulatory role to ensure transparent governance.

Despite progress, no payment system in Africa has yet reached a “mature” level of inclusivity, according to AfricaNenda’s Inclusivity Spectrum. This spectrum, which gauges systems based on their accessibility, affordability, and governance, reveals that most countries’ systems are still at basic or intermediate stages of development. The journey towards inclusivity is ongoing, but the strides made in the last year indicate a growing momentum.

Africa’s payments infrastructure has expanded significantly, with an increase in the number of systems that facilitate instant payments. These systems, while still limited, are gradually integrating more use cases, from person-to-business payments to government disbursements. This broadening scope is essential for reaching underserved groups, particularly women and the economically disadvantaged, who often remain on the periphery of financial services.

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Inclusive Instant Payment Systems (IIPS) aim to make financial services more equitable. They operate 24/7 and allow for low-cost, real-time transactions. The infrastructure that supports these systems—Digital Public Infrastructure (DPI)—is increasingly seen as foundational to a country’s digital and financial landscape. Endorsed by international bodies like the G20, DPI encompasses shared digital systems built on secure, open technologies. These systems, which include digital IDs, payment systems, and data exchange frameworks, are vital to unlocking economic potential on a large scale.

Case studies in the report highlight diverse approaches to instant payment systems across Africa. For example, Mauritius’ MauCas system, South Africa’s PayShap, Tanzania’s Instant Payment System (TIPS), and Zimbabwe’s ZIPIT demonstrate varying levels of inclusivity and sophistication. These systems illustrate both the successes and the ongoing challenges in achieving a fully inclusive payments ecosystem. In Mauritius, for instance, the integration of public and private sector efforts has advanced financial inclusion, yet there are still barriers to full participation among the poorest segments of society.

Governance remains a cornerstone of effective payment systems. For an IPS to be inclusive, it requires transparent oversight and fair participation from all stakeholders, including private and public institutions. This is especially critical in countries with nascent financial infrastructures, where a lack of clear governance can hinder the rollout of inclusive services. In many cases, central banks have taken on a dual role, not only regulating but also directly managing payment systems to ensure alignment with public policy goals.

Accessibility is another key factor in inclusivity. A truly inclusive payment system must support a variety of payment channels, from mobile phones to traditional bank accounts, enabling broad participation. The report underscores the importance of interoperability—allowing different mobile money services to interact seamlessly. In countries where mobile money is prevalent, interoperability has been a game-changer, though challenges remain in scaling these solutions across different regions and service providers.

Cost is a persistent barrier for many would-be users of instant payment systems. The affordability of digital transactions can make or break efforts to broaden financial inclusion. Systems that offer low-cost or no-cost transactions are more likely to reach underserved populations. Some countries have begun to introduce tiered pricing, making transactions cheaper for smaller amounts, which tend to be more common among lower-income users.