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.

Security and consumer protection are also crucial to the success of instant payments. End-users must trust that their transactions are safe and that recourse mechanisms exist in the event of errors or fraud. Unfortunately, many existing systems in Africa still lack robust consumer protection features, a gap that needs addressing if digital payments are to gain broader acceptance.

The SIIPS report points to a clear relationship between financial inclusion and economic development. As more individuals and businesses engage in the digital economy, they create a ripple effect that benefits the broader society. Digital payments increase transparency, reduce the costs associated with cash handling, and make it easier for governments to disburse funds directly to citizens.

Women’s financial inclusion is highlighted as a key area of focus. In many African countries, women are less likely to have access to formal financial services, a gap that inclusive payment systems can help bridge. Case studies in the report demonstrate that targeted efforts to include women in digital payment systems have had positive outcomes, though cultural and logistical barriers persist.

Small businesses are another critical beneficiary of inclusive payment systems. Instant payments can enhance cash flow, reduce reliance on credit, and enable businesses to engage in e-commerce. This is particularly important in rural areas, where traditional banking services are often limited. By providing a secure and efficient means of transaction, instant payments can boost small-scale entrepreneurship and foster local economic growth.

The report emphasizes the role of partnerships in advancing financial inclusion. Collaboration between governments, private sector entities, and international organizations has been pivotal in developing Africa’s payment systems. Such partnerships help pool resources, share expertise, and create platforms that are more likely to succeed in the long term.

In terms of infrastructure, the report notes a steady improvement in the quality of payment systems. More countries are now implementing multilateral interoperability, allowing users of different financial services to transact seamlessly. This progress, while encouraging, needs to be scaled up to cover all regions and demographics.

The findings also indicate that public awareness of digital payment options remains low in many regions. Effective outreach and education campaigns are necessary to build trust and familiarity among potential users. This is especially true for rural and underserved communities, where knowledge gaps can be significant barriers to adoption.

Looking ahead, the SIIPS report outlines several recommendations for stakeholders. Central banks are urged to enhance their oversight functions, ensuring that payment systems are both inclusive and resilient. Private sector participants are encouraged to develop innovative solutions that meet the needs of low-income users. Governments are called upon to foster an enabling environment for digital payments through supportive policies and infrastructure investment.

One of the report’s most striking conclusions is the need for a pan-African approach to financial inclusion. While national efforts are important, the interconnected nature of economies means that regional and continental cooperation can amplify the benefits. Shared standards, cross-border payment systems, and a unified approach to regulation can accelerate the growth of inclusive digital finance.

The path to full financial inclusion is a long one, but the progress documented in the SIIPS 2024 report is a clear indication that Africa is on the right track. With continued investment, collaboration, and innovation, the dream of a fully inclusive financial system—one that reaches every adult on the continent—becomes increasingly attainable. The report is a call to action for all stakeholders to redouble their efforts, recognizing that the future of digital payments is not just about technology but about people and the economic opportunities they deserve.

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