MFS Africa sees PAPSS, African payments system, as key to lifting continental trade

By Ray Mwareya, Ashely Simango
Posted on Wednesday, 23 February 2022 10:29

An employee counts money inside a mobile phone service centre operated by Kenyan telecom operator Airtel Kenya at the Sarit Centre within the Westlands district of Nairobi
An employee counts money inside a mobile phone service centre operated by Kenyan telecom operator Airtel Kenya at the Sarit Centre within the Westlands district of Nairobi, Kenya January 29, 2021. REUTERS/Thomas Mukoya

MFS Africa, which bills itself as the continent´s largest digital payments network, says the Pan-African Payment and Settlement System (PAPSS) can help increase African trade.

“We see PAPSS as both an enabler and facilitator of intra-African trade,” says MFS Africa’s founder and chief executive Dare Okoudjou. “Its ability to allow both the buyer and seller of the trade transaction to pay and receive in their national currencies is a game-changer.”

Africa’s payments architecture is highly fragmented, with dispersed systems, regulations and infrastructure. That makes it harder to send and receive digital payments. PAPSS, backed by Afreximbank and the African Union, aims to harmonize inter-Africa payments and lower the cost of transactions, with a potential saving for Africa of $5bn per year.

MFS Africa, which joined PAPSS this month, runs a digital payments network across 37 African countries. It hopes that it will be able to plug an ecosystem of 320m mobile money wallets into the PAPSS platform. The company’s partners include mobile money networks such as MTN, Airtel and Orange, and money transfer operators such as MoneyGram, PayPal and World Remit.

The initiative is “firmly in keeping with our mantra of making borders matter less,” Okoudjou says. About 80% of cross-border payments for intra-African trade originating with African banks are routed offshore for clearing and settlement, he adds.

  • MFS Africa has opened new offices in Abidjan, Kampala, Kinshasa, Nairobi and Lagos over the last year as part of its expansion.
  • In November, the company raised $100m in equity and debt finance from investors including Goodwell Investments, LUN Partners, CommerzVentures and Allan Gray.

End to ‘humiliation’

Africa remains an expensive continent for sending money. Okoudjou points to a report that the fee for sending $200 from Tanzania to neighbouring Uganda can be as much as 23%.

Yet sub-Saharan Africa is leading global mobile money transfer volumes. About 64% of global mobile money transactions in 2020 happened in sub-Saharan Africa, says Okoudjou, referring to a PAPSS study.

That raises the prospect that bricks and mortar banks in Africa could go the way of the fixed telephone. “I’m not saying the traditional bank model is dying, but it’s certainly going to contract further as mobile and digital continue on their growth trajectory and new players increasingly target the traditional banks’ niche and/or profitable segments,” Okoudjou says.

Carter Mavhiza is an independent public accountant in Harare, Zimbabwe, where Western embargoes and confusing monetary policies mean that Zimbabwean banks are largely disconnected from SWIFT global digital payments system. He calls the need for re-routing of inter-African transactions “humiliating.”

  • He points to the example of a Zimbabwean bank wiring funds to neighbouring Mozambique about 700 miles away. Such transactions need to be cleared offshore in Brussels, 7,500 miles away.
  • “Africa has no payments clearance sovereignty,” Mavhiza argues.

Bottom line

A continent-wide settlement system puts Africa in control of its own payments.

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