OPINION: Digital Adoption Is Rising Among African SMEs, but International Payments Remain Costly

By Mark Mwaniki, Sales Director for Kenya at Verto

Across Africa, small and medium-sized enterprises (SMEs) are rapidly embracing digital tools to run and grow their businesses.

From mobile money and digital banking to online marketplaces, the continent has become one of the world’s most dynamic environments for financial innovation.

Yet while domestic payments have become faster and more accessible, moving money across borders remains expensive, complex and inefficient for many businesses.

This gap is becoming increasingly visible as SMEs expand beyond their home markets. Digital payments are now widely used across the continent, particularly in countries such as Kenya where mobile money has transformed the financial landscape.

Research by Mastercard shows that more than 90 per cent of Kenyan SMEs already accept digital payments, and nearly all plan to expand their digital capabilities in the coming years.

Cross-Border Payments Still Expensive

However, the ease of sending money locally often disappears once a transaction crosses a national border.

According to a 2024 survey by the African Export-Import Bank (Afreximbank), 68 per cent of African SMEs say payment challenges are the biggest barrier to expanding cross-border trade.

Transaction costs in some African payment corridors can reach as high as 10 to 12 per cent of the transfer value, nearly three times the global average.

By comparison, the World Bank estimates that the global average cost of sending cross-border payments is below four per cent.

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For large multinational corporations, these costs may be absorbed as part of doing business. For SMEs, however, they can significantly limit growth.

Impact on Small Businesses

Small businesses often operate with tight margins and limited working capital.

When a company loses up to 10 per cent of the value of a payment through fees, exchange rate spreads and intermediary costs, the impact is immediate. That loss can affect pricing, profitability and the ability to compete with larger firms.

Yet, cross-border payments are not optional for many SMEs. Businesses across Africa increasingly rely on international suppliers, overseas customers and regional trade networks.

An e-commerce retailer importing goods, a tour operator receiving bookings from international travellers or a manufacturer sourcing materials from neighbouring countries all depend on the ability to move money across borders efficiently.

Outdated Infrastructure Slows Transactions

Unfortunately, the infrastructure supporting these transactions has not kept pace with the rapid growth of digital commerce across the continent.

Many cross-border payments still pass through a chain of correspondent banks and intermediaries before reaching their destination. Each institution involved adds time, cost and administrative complexity.

Foreign exchange availability, compliance requirements and regulatory differences between countries can further slow transactions.

For SMEs, this fragmentation can translate into settlement times that stretch from hours to several days, along with opaque pricing structures that make it difficult to predict the final cost of a transaction.

AfCFTA and the Promise of Regional Trade

The challenge is particularly important at a time when African governments are seeking to expand regional trade.

The African Continental Free Trade Area (AfCFTA), which came into force in 2021, aims to create the world’s largest free trade area by connecting 54 countries and more than 1.3 billion people.

According to the United Nations Economic Commission for Africa, the agreement could increase intra-African trade by more than 50 per cent over the coming decades.

However, trade agreements alone cannot unlock these opportunities if businesses cannot move money easily between markets.

Improving cross-border payment infrastructure will therefore be essential to enabling African SMEs to participate fully in regional and global trade.

Emerging Solutions and Fintech Innovation

Encouragingly, efforts to address these barriers are beginning to take shape. Financial institutions, fintech companies and policymakers are increasingly exploring ways to modernise payment systems and reduce costs.

New digital infrastructure is emerging that allows businesses to access local collection accounts across multiple markets, settle transactions more quickly and manage foreign exchange exposure more effectively.

At the same time, regional initiatives such as the Pan-African Payment and Settlement System (PAPSS) are working to enable cross-border transactions in local currencies, reducing reliance on intermediary currencies such as the US dollar.

Unlocking Growth for African SMEs

These developments represent important steps forward, but more progress is needed. SMEs already account for roughly 90 per cent of businesses across Africa and contribute more than 50 per cent of employment in many countries.

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Enabling these enterprises to trade more easily across borders could unlock significant economic growth, strengthen regional supply chains and create new jobs. At Verto, we solve this gap for businesses.

Through the integrated payments platform, companies can manage multi-currency flows, foreign exchange and cross-border payments from a single system.

Africa has already shown that it can leapfrog traditional financial systems through innovation. Mobile money is a clear example of how the continent has reshaped global conversations about financial inclusion.

African businesses can lead the global digital trade with Verto.

The next frontier is ensuring that the infrastructure supporting international payments evolves at the same pace.

If African SMEs are to scale and compete in an increasingly connected global economy, the ability to move money across borders quickly, transparently and affordably will be essential.

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Mark Mwaniki-Verto Sales Director -Kenya PHOTO/File