Africa's efforts to develop inclusive digital payment systems are facing significant challenges, with 10 instant payment systems on the continent yet to be ranked on an inclusivity spectrum developed by the AfricaNenda Foundation. The assessment, which evaluated 36 systems, highlights the need for payment infrastructure that makes digital transactions affordable, accessible, and convenient for individuals and businesses. The findings were presented by Serge Moungnanou Ambadiang, Partnership, Advocacy and Capacity Building Specialist at AfricaNenda Foundation, during a media training in Nairobi, Kenya.
According to the AfricaNenda's Instant Payment Systems (IPS) Inclusivity Spectrum, 15 systems were classified at the basic level, 10 at the progressed level, and only one at the mature level. Nigeria's Inter-Bank Settlement System Plc (NIBSS) Instant Payment System was identified as the only system to have attained the mature level, placing the country's payment infrastructure at the highest category of inclusivity under the framework. The assessment evaluated instant payment systems based on their ability to support affordable digital transactions, accommodate different payment service providers, provide effective consumer protection, and facilitate a broad range of payment use cases.
The AfricaNenda Foundation defines inclusive instant payment systems as infrastructure that enables low-value, low-cost digital transactions in near real-time, ideally operating 24 hours a day throughout the year. The systems are expected to support interoperability, allowing users of different financial service providers to transact without being restricted by the platforms through which they access financial services. This enables a seamless experience for users and promotes financial inclusion.
The framework classifies payment systems into basic, progressed, and mature levels, alongside systems that have not been ranked. At the basic level, systems are expected to support common payment channels, person-to-person (P2P) transfers, and person-to-business (P2B) payments. These transactions are crucial for encouraging digital payment adoption, particularly for domestic transfers, which can otherwise involve transportation expenses and safety concerns when cash is used.
At the progressed level, payment systems are expected to allow all licensed payment service providers to participate, including commercial banks, mobile money operators, microfinance institutions, and fintech companies. The framework also requires governance arrangements that enable participants to contribute to decisions on system design and operation, as well as the involvement of the central bank in governance. This ensures that various stakeholders have a say in the system's development and operation.
The presentation identified payment systems at different stages of inclusivity across the continent, including Ghana's GIP, Egypt's IPN, Ethiopia's EthSwitch, Tanzania's TIPS, Rwanda's eKash, and South Africa's PayShap. Additionally, Nigeria's eNaira and Nigeria Mobile Money were listed at the basic level, distinct from the NIBSS Instant Payment System, which was placed in the mature category. These systems are at various stages of development, with some having made significant progress towards achieving inclusivity.
AfricaNenda's inclusivity spectrum is designed to track the progress of instant payment systems across Africa and identify areas requiring improvement. The assessment highlights that the development of digital payment infrastructure goes beyond the availability of electronic transfers. It also involves ensuring that different providers can participate, transactions remain affordable, users have access to effective complaint-resolution mechanisms, and payment services support a wide range of needs.
Key points
- Only one instant payment system in Africa has attained the mature level of inclusivity.
- Ten instant payment systems in Africa remain unranked on the inclusivity spectrum.
- The AfricaNenda Foundation's framework classifies payment systems into basic, progressed, and mature levels to track their progress towards inclusivity.
