Grace Ashiru
Duplo, the leading provider of payment, spend, and vendor management solutions for African businesses, has released a new report predicting substantial growth in cross-border B2B payments across Africa, driven by shifting global trade patterns and the rise of innovative payment solutions. This growth is expected to unlock the full potential of both 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 installment in Duplo’s annual series on B2B payment trends. It delves into a variety of issues, including the key factors influencing trade within and beyond Africa, the current landscape of cross-border B2B payments on the continent, and projections for the future.
According to the report, the value of intra-African trade reached an estimated $193 billion in 2022, representing 13.8 percent of total trade in Africa. However, this figure likely understates the true extent of intra-African commerce, as a significant portion of cross-border trade remains informal and underreported.
The report highlights that 40 percent of cross-border trade payments between East and West African countries are conducted in cash, with underreporting rates ranging from 12 to 76 percent. Meanwhile, large-value formal cross-border B2B payments continue to be dominated by traditional banking channels, despite their high transaction fees and lengthy processing times. These findings emphasize the urgent need for B2B cross-border payment solutions that can both accurately capture and efficiently facilitate these transactions.
Interoperability between various payment systems remains a significant challenge, particularly concerning cross-border transactions. The report highlights that out of 32 instant payment systems operating across Africa, fewer than half can function together seamlessly. This underscores the importance of initiatives like the Pan-African Payment and Settlement System (PAPSS), which, although still in its early stages, are vital for streamlining and formalizing trade across the continent.
In terms of extra-African trade, Africa’s share of global trade value has remained stagnant at 3%. However, emerging global trends, such as the rise of various Asian countries as economic powerhouses, the new multi-polar world order led by the US and China, and other factors, suggest a potential shift in global trade patterns. These developments create opportunities for effective B2B cross-border payment solutions that can not only bolster trade within and beyond the continent but also enhance transparency, improve efficiency, reduce transaction costs, and provide other significant benefits.
Commenting on the report, Yele Oyekola, CEO and co-founder of Duplo, stated, “As businesses adapt to the evolving opportunities and challenges presented by shifting global trade patterns, the demand for efficient and cost-effective cross-border payment solutions is rising. Our report underscores the essential role that technology can play in overcoming the limitations of traditional banking systems. We believe that embracing these emerging technologies will allow businesses to fully harness the potential of both intra- and extra-African trade, thereby fostering economic growth throughout the continent.”
The report, titled *The State of Cross-Border B2B Payments in Africa and its Impact on Trade,* is available for free download on Duplo’s website.
