A new report from Duplo, the leading provider of payment, spend, and vendor management solutions for African businesses, is predicting that changing global trade patterns and the emergence of new payment solutions will drive significant growth in cross-border B2B payments in Africa and unlock the full potential of intra- and extra-continental trade.
The report, titled “The State of Cross-Border B2B Payments in Africa and its Impact on Trade,” is the third in an annual series of B2B payment reports from Duplo, and it examines a wide range of issues, including key drivers of intra- and extra-African trade, the current state of cross-border B2B payments in Africa, and the outlook for the future.
The report reveals that the value of intra-African trade reached an estimated $193 billion in 2022, accounting for 13.8 percent of total African trade.
This figure, while significant, likely understates the true scale of intra-African commerce, as a significant proportion of cross-border trade is informal and underreported.
According to the report, 40 percent of cross-border trade payments between East and West African countries are made in cash, with underreporting ranging from 12 to 76 percent.
At the same time, traditional banking channels still dominate large-value formal cross-border B2B payments, despite the high transaction fees and lengthy processing times.
These realities underscore the critical need for B2B cross-border payment solutions that can accurately capture and efficiently facilitate these transactions.
Interoperability between different payment systems is also a major challenge, especially when it comes to cross-border transactions.
According to the report, out of 32 instant payment systems spread across Africa, less than half are able to work together seamlessly.
This is why initiatives like the Pan-African Payment and Settlement System (PAPSS), although still in its early stages, are crucial for streamlining and formalizing trade across the continent.
When it comes to extra-African trade, Africa’s share of global trade value has remained stagnant at 3%.
However, new global trends such as the emergence of various Asian countries as economic powerhouses, the new multi-polar world order fronted by the US and China, and other trends point to a shift in global trade patterns.
These developments present opportunities for effective B2B cross-border payment solutions that will not only support more trade across and outside the continent but also enhance transparency, improve efficiency, reduce transaction costs, and offer other benefits.
Commenting on the report, Yele Oyekola, CEO and co-founder of Duplo, said,
“As businesses navigate new opportunities and challenges that come with changing global trade patterns, there is an increasing need for efficient and cost-effective cross-border payment solutions. Our report highlights the critical role technology can play in overcoming traditional banking limitations. We believe that by embracing these new technologies, businesses can unlock the full potential of intra- and extra-African trade, driving economic growth across the continent.”
Comments 1