New report from Duploa leading provider of payment, spend and supplier management solutions for African businesses, predicts 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 its full potential and extra-continental trade.
Details
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 payments reports from Duplo and examines a wide range of topics, 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.
By The Numbers
The report reveals that the value of intra-African trade has reached estimated at $193 billion in 2022, accounting for 13.8 percent of total African trade. This figure, although significant, likely underestimates the true scale of intra-African trade, as a significant proportion of cross-border trade is informal and implied.
According to the report, 40 percent of cross-border trade payments between East and West African countries are made in cash, with indications ranging from 12 to 76 percent.
At the same time, traditional banking channels still dominate large-value formal cross-border payments, despite high transaction fees and long processing times. These realities underscore the critical need for cross-border B2B payment solutions that can accurately capture and effectively facilitate these transactions.
Magnification
Interoperability between different payment systems is also a major challenge, especially when it comes to cross-border transactions. According to the report, of the 32 direct payment systems spread across Africa, less than half can work together seamlessly. This is why initiatives such as Pan African Payments and Settlement System (PAPSS), although still in its early stages, they are vital to streamlining and formalizing trade across the continent.
Zoom out
In terms of extra-African trade, Africa’s share of world trade value remained unchanged stagnant at 3%. However, new global trends such as the emergence of various Asian countries as economic powerhouses, the new multipolar world order faced by the US and China, and other trends indicate a change in global trade patterns.
These developments present opportunities for effective cross-border B2B payment solutions that will not only support more transactions within and across the continent but also enhance transparency, improve efficiency, reduce transaction costs and provide other benefits.
What They Say
Commenting on the report, Yele OyekolaCEO and co-founder of Duplo, said, “As businesses navigate new opportunities and challenges that come with changing global trade patterns, there is a growing need for efficient and cost-effective cross-border payment solutions.
Our report highlights the critical role technology can play in overcoming traditional banking constraints. We believe that by embracing these new technologies, businesses can unlock the full potential of intra-African and extra-African trade, driving economic growth across the continent.”
The state of cross-border B2B payments in Africa and its impact on trade is available download for free on the Duplo website.
Stay up to date with news and other items on our WhatsApp Community Page, Twitter/Xand subscribe to our weekly newsletter to make sure you don’t miss any news.
Related
