The sad fact of African trade is that a typical financial transaction between two companies from different countries on the African continent first goes to New York or Europe for vetting and then finds its way back to Africa, all the while collecting additional fees and costs.
In some cases, customers can wait days for approval, leaving African trade under the control of institutions outside the continent.
This was one of the hard facts revealed at the 2026 Africa Trade Conference hosted by Access Bank in Cape Town on Wednesday, where participants cited the high costs of trade finance as a key factor inhibiting intra-continental trade.
African Development Bank Southern Africa Regional Director Dr Kennedy Mbekeani told the conference that African markets are fragmented, small and undeveloped. This fragmentation is why the Ukraine war caused food crises in some African countries and why the Middle East crisis caused food and fuel insecurity on the continent.
He said this market segmentation was a choice of African governments and that opening borders to trade would bring greater trade and economic benefits to African governments.
Mike Ogbal, CEO of the Pan-African Payments and Settlement System (PAPSS), said his company’s payments system aims to return control of Africa’s trade finance to the continent. It was introduced in 2022 and is currently used in 22 African countries and 170 banks across the continent.
Originally launched by the African Union and the African Export-Import Bank to facilitate cross-border payments in Africa’s local currencies without converting to hard currency, Ogbal said it initially targeted a typical transaction time of 120 seconds to complete.
In fact, transactions that previously often took days to complete now take about 12 seconds to complete.
He said the platform’s technology was developed on the continent and would be a new way to address traders’ vulnerability to foreign currency fluctuations, for example in intercontinental trade.
It also provides a solution for traders who have invested in African countries but later find that they cannot externalize their capital.
Additionally, it also provides a great way to make payments in local currencies to different locations in Africa. “PAPSS is a world-class financial infrastructure built on global standards,” he said.
Mr. Ogbal explained that PAPSS is governed through four tiers, with the top layer consisting of the Board of Directors of African Central Bank Governors.
Mr Mbekeani said that while the African Continental Free Trade Area was an important development towards intra-regional trade on the continent, its benefits would be felt unevenly.
Free trade areas will fail unless they also deliver infrastructure benefits to low-income countries. To overcome this challenge, it is important to convince governments of the need to work collaboratively with the private sector and other stakeholders in the development and operation of infrastructure.
“There are regulations to promote domestic economic growth, there are regulations to promote stability and peace, but we need better regional integration to bring stability to the continent. But even if regulatory harmonization is achieved, infrastructure is still needed,” he said.
Access: www.businessreport.co.za
