Duplo, the leading provider of payment, spend, and vendor management solutions for African businesses, predicts that changing global trade patterns and new payment solutions will boost cross-border B2B payments in Africa and unlock the full potential of intra- and extra-continental trade.
The third of Duplo’s annual B2B payment report, “The State of Cross-Border B2B Payments in Africa and its Impact on Trade,” examines vital intra- and extra-African trade drivers, the current state of cross-border B2B payments in Africa, and the future.
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Optimising B2B payments across African borders
The paper estimates that intra-African trade was $193 billion in 2022, 13.8% of overall African commerce. This figure may underestimate intra-African trade because much cross-border trade is informal and underreported.
Cash accounts for 40% of East-West African cross-border trade payments, with underreporting ranging from 12% to 76%. Despite hefty transaction fees and long processing times, traditional banking channels dominate large-value formal cross-border B2B payments.
These realities highlight the need for B2B cross-border payment solutions that accurately collect and efficiently process these transactions.
Integration of payment systems is also difficult in cross-border transactions. The survey found that less than half of Africa’s 32 immediate payment systems function together.
The Pan-African Payment and Settlement System (PAPSS), though young, is essential for simplifying and formalising trade throughout the continent.
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How do cross-border payments impact African businesses?
African trade value has stayed at 3% of world commerce. The rise of Asian economic powerhouses, the US-China multi-polar world order, and other global events suggest a shift in global trade patterns.
Effective B2B cross-border payment solutions will increase trade across and outside the continent and improve transparency, efficiency, transaction costs, and other benefits.
Speaking on the findings, Duplo CEO and co-founder Yele Oyekola said that as businesses navigate new opportunities and challenges posed by changing global trade patterns, there is an increasing need for efficient and cost-effective cross-border payment solutions.
According to their analysis, technology is crucial to circumventing traditional banking limits.
They believe enterprises can maximise intra- and extra-African commerce by adopting these new technologies, boosting economic growth across the continent.
The State of Cross-Border B2B Payments in Africa and its Effects on Trade are available for free from Duplo’s website.