CROSS-BORDER PAYMENTS COST AFRICAN FIRMS BILLIONS

African businesses are losing significant amounts of money on cross-border transactions because of high foreign exchange costs, slow payment processes and complicated banking requirements.

The challenges are becoming more pressing as companies expand trade across the continent under the African Continental Free Trade Area.

Businesses often face hidden foreign exchange spreads, multiple clearing charges and currency conversion costs when paying suppliers or receiving funds from other African countries. In some cases, transactions can take several days to settle, creating cash-flow problems for companies.

For example, a $20,000 supplier payment with a 1.5 per cent hidden foreign exchange spread could cost a business more than N400,000, according to a report by The PUNCH.

The situation is worsened by foreign exchange volatility and liquidity constraints in several African markets, including Nigeria, where businesses can face delays accessing foreign currency for imports.

Cross-border payment platform Oneremit said the existing financial infrastructure has struggled to keep pace with Africa’s growing trade needs. The company, founded in 2024, said it now serves more than 1,000 businesses and has processed over $200m in outbound commercial transactions.

The high cost and slow speed of international payments remain a major obstacle to smoother intra-African trade and could affect businesses seeking to take advantage of the continent’s expanding single market.