Executive Summary
The environment within which African financial systems operate has undergone radical changes since the turn of the century. Once chronically on the fringes of the global arena for traditional finance, a deepening of financial systems can be observed in almost every country across the continent bringing banking, insurance and credit services to more households and enterprises than ever before. New players and new products, often enabled by new technologies, have broadened access to financial services in Africa. Competition and innovation dominate African financial systems, cutting across all facets of the payments industry - including channels, methods and value chains - to reach previously unbanked vestiges of the population.
In this new and changing payments landscape, regulators are tasked with the twin burdens of fostering financial innovation whilst ensuring consumer protection and regulatory compliance. Driven by proprietary data, complimentary research and in-depth interviews with representatives from relevant stakeholders, the Unlocking the Potential of Digital Payments in Africa report examines the legal and regulatory environment underpinning the metamorphosis of payment systems in Africa. Focusing on Egypt, Ghana, Kenya, Nigeria, Rwanda, South Africa, and the West African Economic and Monetary Union (WAEMU), the report provides a comparative analysis of the key features of regulatory sandboxes and payment service licenses in these jurisdictions. The comparative advantages and continental gaps identified in this exercise are the subject of the final element of the report, which provides policy and practitioner recommendations to improve and harmonise regulation across these jurisdictions.
An Introduction to the Payment Industry in Africa
Technology has emerged as a silver bullet in Africa, enabling the continent to keep pace with the changing landscape of payments for goods and services globally. Africans are adopting electronic payments such as cryptocurrency and digital currencies as a complement to traditional cash-based payments. These shifts towards electronic payments and the surge of alternative conceptions of money has precipitated an influx of new investments and supportive regulatory changes that are redefining Africa’s payment landscape. Digital payments are changing the mode of everyday functions, including how Africans bank, shop, and do business. Nonetheless, the majority of monetary transactions in Africa remain cash-based, with less than 10% of all payment transactions made via electronic or digital channels1. The growth drivers fuelling the penetration of digital and mobile based payments in Africa, as well as the challenges impeding its development, convenience and scalability are discussed in turn on the next page.
1 The Banker, 2023. Payments Innovation the Key to Financial Inclusion in Africa
