Africa’s cross-border payments are hitting a local currency bottleneck

Africa is building faster ways to move money across borders. However, faster payment rails are exposing the question about whether banks and payment providers have enough of the right currencies, at the right price, to settle those payments.

In February, the Pan-African Payment and Settlement System (PAPSS) and Kenya’s Pesalink said more than 80 Pesalink participants were connected to more than 160 banks on the PAPSS network, allowing 24/7 cross-border payments in local currencies.

Mobile money has already made digital payments part of everyday life for millions of Africans. The Global System for Mobile Communications Association says mobile money processed more than $2.1-trillion globally in 2025, with 2.3 billion registered accounts and 593 million active on a 30-day basis. Africa (apart from North Africa) accounted for more than two-thirds of the growth in registered accounts, making the region central to the industry’s expansion.

Cross-border payments remain a harder problem. The World Bank says remittance costs have fallen to about 6% globally, but Africa continues to record the highest regional average.

At the same time, stablecoins are becoming part of the conversation. Their global market capitalisation reached about $320-billion by the end of May, although the Bank for International Settlements says their use in real-economy payments remains modest and their performance across borders can vary once fees, foreign exchange (FX) spreads and on- and off-ramp costs are included.

Raj Kamal sits close to this transition. As founder and CEO of TransFi, he runs a payments infrastructure business that says it covers more than 70 countries, 250 payment methods and 40 currencies, with stablecoins used alongside local payment rails. TransFi projects about $5-billion in transaction volume for FY26.

Kamal discusses what Africa gets right in payments, where the system still breaks down and whether stablecoins can ease liquidity pressures.

Bonface Orucho (BO): Tell us about building TransFi.

Raj Kamal (RK): I founded TransFi in 2022 with a focus on enabling cross-border payments using stablecoins as the rails. The ultimate objective is to make payments faster, more predictable, simpler and cheaper for businesses and individuals in emerging markets across Asia, Africa and Latin America.

Over the past four years, we have built a business that enables remittances, payroll processing, freelancer payments and business-to-business (B2B) flows into and out of Asia, Africa and Latin America.

BO: When you compare Africa with Asia and Latin America, where is the continent genuinely ahead in payments, and where does it still need to improve?

RK: In terms of volumes and flows, especially remittances coming into Africa from Europe or the Middle East are substantial. Outbound flows from Africa to other parts of the world, particularly China, are also substantial and growing fast.

There have also been some fantastic initiatives. The mobile money revolution, which started with M-Pesa and spread to other parts of Africa, was unique to the continent and brought financial inclusion and payments together.

You could argue that airtime tokenisation, or using airtime as a way to make payments, was one of the first real-world assets put digitally out there. It was a precursor to what real-world assets, blockchain and stablecoin payments are about today. The technology is different, but the concept is similar.

Africa has always been innovative in payments. The Pan-African Payment and Settlement System has also been an innovative effort to drive better and faster payments and settlements across the continent.

I would not necessarily say Africa is lagging. I think liquidity needs to deepen across currencies to enable cross-border transfers to happen faster and more cheaply. Financial inclusion also has to grow further.

BO: What does TransFi’s reach in Africa look like today?

RK: We cover a number of countries across sub-Saharan and West Africa, including Kenya, Ghana, Zambia, Uganda and Tanzania. We also operate in Nigeria, support the Central African and West African currencies, and operate in South Africa. Recently, we switched on Angola.

Africa currently accounts for about 10% of our total volumes. We are newer to Africa compared with Asia, so it is a smaller share, but it is one of the fastest-growing parts of our business as we scale our presence and the opportunity here.

BO: Were there any African markets or payment corridors that surprised you when you entered the continent?

RK: I had always known that payments into Africa were big. I had mainly thought of those as remittances. What I did not realise was how much technology talent existed for freelancer payments and cross-border payroll processing.

Freelancer payments in particular were a surprise, because of the volume of technology talent and the services being provided to the rest of the world.

The scale of payments between Africa and Asia, especially B2B payments to China, is also quite large. I knew about these flows, but the scale of the opportunity was bigger than I had imagined.

BO: Where do cross-border payments in Africa usually slow down or become expensive, especially for payments between African countries and markets such as China?

RK: Whether it is cross-border payments or even intra-African payments, I think technology is ahead of liquidity. The bottlenecks come on the liquidity side.

Even within Africa, if you are settling between the Nigerian naira and the Kenyan shilling, there might be more liquidity available than with some other currency pairs. But the real question is how much liquidity is available and how freely money can move. FX liquidity and FX spreads are where the real challenge lies when you are talking about intra-African transfers.

The same applies to payments into or out of Africa. At TransFi, because we use stablecoins for transfers, we look at conversion rates between stablecoins and African currencies. It is one thing to move $1-million through a corridor. It is very different to move tens of millions of dollars, and completely different again when you are moving $100-million.

At large volumes, the availability of liquidity in real time and the spread needed to keep costs down become major challenges.

BO: What does that mean for a bank, fintech or business trying to pay someone across the border?

RK: Take a transaction between Nigeria and Tanzania. If somebody is sending money from Nigeria to Tanzania and wants that transaction to happen in real time through the Pan-African Payment and Settlement System, the technology exists.

The question is whether the banking partner in Nigeria, the central bank in Nigeria and their counterparts in Tanzania have enough liquidity available to provide Tanzanian shillings in real time for payouts.

When volumes become very large, the availability of Tanzanian shillings can become a challenge. Conversion rates can also differ significantly from the official exchange rate.

It is one thing to say that money can move. It is another thing to have naira actually put into the system and Tanzanian shillings made available for payout on the other side in real time.

BO: Can stablecoins actually solve Africa’s liquidity problem, or do they mainly provide a faster way to move money?

RK: In principle, stablecoins can help solve the liquidity problem, especially where liquidity is limited between two local currencies. The depth of stablecoin markets is growing faster, liquidity is improving and bid-ask spreads are becoming thinner.

So converting one local currency into a stablecoin and then converting that stablecoin into another currency could become both faster and more liquid, with thinner spreads.

That could help solve some liquidity problems where direct currency pairs do not have enough liquidity. – Bird Story Agency/DM

This story first appeared in our weekly DM168 newspaper, available countrywide for R39.