Financial systemExplainer
How a payment crosses an African border, and why it can cost so much
Sending money between African countries often passes through banks on other continents and in other currencies. Each step adds cost and time. Here is how the chain works and what local-currency settlement changes.
What happened
A cross-border payment in Africa typically passes through several banks and often through the dollar or the euro, and each step adds fees and delay.
Why it matters
Sending $200 to sub-Saharan Africa costs around 9% of the amount on average, against about 6% worldwide, according to World Bank figures cited by the IMF. For businesses, the cost shows up in margins and in the days money spends in transit.
What to watch
Whether systems that settle in local currencies, such as PAPSS, move from connecting banks to carrying real volume.
Suppose a company in Nairobi pays a supplier in Accra. There is no direct pipe between their banks. The payment usually travels through one or more correspondent banks, institutions that hold accounts for other banks and pass money between them. Many of those correspondents sit outside the continent, which is why the dollar and the euro so often appear in the middle of a payment between two African currencies.
Where the cost comes from
Each step in that chain can charge a fee. The shillings are sold for dollars, the dollars move, and then they are sold for cedis, so there are two currency conversions, usually with a margin on each. Correspondent banks also take time. Afreximbank's February release on a payments partnership in Kenya, citing a 2023 World Bank report, put the average cost of sending money across African borders at 7–8% of the amount sent, and settlement time at three to seven business days.
The World Bank measures remittances, not company payments, so its figures are only a guide to what a business pays. They are still the best public benchmark. In a June 2026 article, the IMF cited World Bank data showing that sending $200 to sub-Saharan Africa costs around 9% of the amount on average, against about 6% worldwide. The UN target is under 3%.
What local-currency settlement changes
Systems such as PAPSS aim to remove the middle of the chain. The sender pays in their own currency, the network validates the instruction, and the recipient's bank credits funds in the recipient's currency. Direct settlement between participating institutions is expected to speed up processing and reduce reliance on the dollar and the euro, according to Ecofin Agency's coverage of Central Africa's central bank joining the network.
What it does not change
A shorter chain does not remove every cost. A bank still has to be connected to the network, and the two currencies still need a price. Liquidity matters too: someone has to hold enough of each currency to settle. And compliance checks apply to every payment.
PAPSS says it operates in more than 30 countries. Joining a network and routing everyday payments through it are different things, so for now many corridors still depend on the older chain.
What to watch
- NextCorridors with real volume. Look for published volumes on specific routes, not only country counts.
- end-2026 Central Africa connects. CEMAC banks are due to join PAPSS.
- OngoingWorld Bank price data. Watch whether African corridor costs move towards the 3% target
Disclosure: Starks Associates, which publishes Starks Newsroom, provides payment and liquidity services to businesses.