The cost of sending remittances in Africa is disproportionately high, with fees reaching as much as 27% in some countries. This is significantly higher than the global average of 6.3%.
To address this issue, Nshuti Mbabazi, Managing Director of the Better Than Cash Alliance, has called for mobile network interoperability across Africa to make cross-border transactions cheaper and faster.
Mbabazi emphasized the need for a system that allows merchants to accept payments from any African bank account or mobile wallet, eliminating the reliance on remittances and reducing transaction costs.
However, achieving interoperability poses significant challenges, including data localization laws that require financial institutions to store customer data locally.
Potential solutions include establishing regional data centers to facilitate access to data while allowing businesses to operate more efficiently.
The AfCFTA Digital Trade Protocol (AfCFTA DTP) also addresses interoperability challenges, allowing businesses to operate in Africa’s digital market without localizing data in every country.
Experts urge the private sector to push for the adoption of the AfCFTA DTP, emphasizing its role in fostering financial inclusion and economic growth across Africa. With solutions like merchant of records and AfCFTA DTP, Africa’s remittance problem could soon be a thing of the past.
