Every time a small trader in Eldoret pays a supplier in Dar es Salaam, the money travels to New York first. That single fact, raised at a high-level cross-border payments forum in Nairobi in 2026, captures the core of the problem. Despite sharing borders, cultures, and often languages, African businesses are still forced to settle transactions in US dollars, routed through American or European correspondent banks, incurring fees and delays that directly eat into their margins.

Sub-Saharan Africa remains the most expensive region in the world to send money, with average costs of 8.45% to 8.78% to send $200. The global average is 6.49%. The G20 target is 3%. Africa is paying more than double the target, and the gap has persisted for years despite significant infrastructure investment.

Here is exactly why, and what is genuinely changing in 2026.

Reason 1: The Correspondent Banking Model Was Not Built for Africa

The correspondent banking system, the mechanism that moves most international payments globally, works by routing transactions through a chain of intermediary banks, typically headquartered in New York or London, before reaching the destination.

A Nigerian business paying a Kenyan supplier converts naira to USD at a bank in Lagos. That USD travels to a correspondent bank in New York. The correspondent bank routes it to another correspondent in Nairobi. That bank converts to Kenyan shillings before the supplier receives payment. Every handoff adds a fee. Every conversion adds a spread. The entire journey can take 3 to 7 business days.

This model was built in an era when no direct banking relationships existed between African countries. It was never designed for intra-African trade at scale. Between 2020 and 2026, global tier-one banks accelerated their exit from African correspondent relationships through a process known as de-risking: Barclays completed its century-long exit in 2022, Standard Chartered divested subsidiaries across Angola, Cameroon, Gambia, Sierra Leone, and Zimbabwe between 2022 and 2025, and confirmed a full exit from Botswana in early 2026.

The retreat of global banks from African correspondent relationships has not lowered costs. It has raised them, by concentrating remaining correspondent relationships and reducing competition at every routing point.

Reason 2: Africa Has 54 Currencies and No Unified Settlement System

Europe solved this with the euro and SEPA. North America solved it with the ACH network and dollar dominance. Africa has neither.

The continent operates 54 distinct currencies, each with its own exchange rate, liquidity profile, and volatility characteristics. Direct currency pairs between most African countries simply do not exist at a commercial scale. There is no liquid NGN-KES market. There is no direct GHS-ETB exchange. When these currencies need to meet, they meet via USD or EUR, adding two conversion spreads to what should be a regional transaction.

FX liquidity issues cause an estimated $5 billion in annual losses across African cross-border payments, driven by dependence on offshore USD and EUR clearance that increases transaction costs at every step.

The deeper problem is structural: African economies price most international trade in dollars, invoice in dollars, and settle in dollars, even when both the buyer and seller are African. This self-imposed dependency keeps the correspondent banking system central to every transaction.

Reason 3: Regulatory Fragmentation Makes Every Corridor Different

52% of cross-border payment providers cite varying regulations as their top challenge. In Africa, that problem is acute. Each of the continent’s 54 countries maintains its own central bank framework, its own KYC and AML requirements, its own licensing conditions for payment providers, and its own rules on capital controls and FX repatriation.

Francophone West Africa operates under OHADA law and centralized monetary authorities. Anglophone markets maintain independent central banks. East Africa has regional EAC frameworks but incomplete payment interoperability. Southern Africa has SADC agreements that have not yet translated into reduced payment friction.

The practical effect: a fintech that wants to operate a payment corridor between Nigeria and Tanzania needs separate regulatory relationships, licences, and compliance infrastructure in both countries. The cost of that compliance is passed on to businesses using the corridor.

Reason 4: Speed Targets Are Being Missed at Scale

Only 54% of wholesale payments in Sub-Saharan Africa reach recipients within one hour, against a G20 target of 75%. For retail payments and remittances, only 42% meet the same threshold.

Globally, just 35% of retail payments and 55% of wholesale payments reach beneficiaries within one hour. Average cross-border transaction time via correspondent banking is 3 to 5 business days.

For a business managing cash flow across African markets, a 3 to 5 day settlement delay is not a minor inconvenience. It is a working capital constraint that limits how many orders can be placed, how many suppliers can be paid on time, and how aggressively the business can grow.

Reason 5: Global Bank De-Risking Is Concentrating Costs

Global banks terminated relationships with 127 African institutions during 2024 and 2025, citing compliance costs and reputational risk. Remittance providers in Nigeria, Kenya, and Ghana now reroute transfers through hubs in the UAE and Europe as a result.

When fewer banks are willing to act as correspondents for African transactions, the remaining ones can charge more. Competition disappears. Margins expand. The businesses paying supplier invoices and receiving export payments absorb the cost.

What Is Actually Changing: The 2025 and 2026 Infrastructure Shifts

The situation is not static. The structural changes underway are significant, even if the cost data has not yet fully reflected them.

PAPSS now covers 19 countries. The Pan-African Payment and Settlement System connects 19 countries and 160+ commercial banks, enabling cross-border payments between participating countries in local currencies without routing through USD or EUR. PAPSS has reduced intra-Africa transaction costs among participating countries by up to 27% for end users, while connected banks have seen transaction volume surges of over 1,000% through digital channel integration.

The Nigeria-Ghana wallet corridor went live in February 2026. For the first time, Nigerian businesses can send naira directly to Ghanaian recipients in cedis, without a dollar conversion in either direction. This is the model that needs to scale across the continent.

Kenya’s Pesalink joined PAPSS in February 2026. This connects 80+ Kenyan banks, fintechs, SACCOs, and telcos to the PAPSS network for instant 24/7 settlement in local currencies.

The African Currency Marketplace launched in 2025. This enables direct exchange of local African currency pairs, eliminating the double USD conversion that currently inflates the cost of intra-African B2B payments.

Mobile money fees undercut banks significantly. Mobile money remittances typically cost 1.5% to 3%, compared to traditional bank transfers that often cost 7% or more. Cryptocurrencies cut remittance fees by up to 60% and enable faster settlements.

What This Means for African Businesses Today

The correspondent banking model is in retreat but has not been replaced at scale. PAPSS covers 19 of 54 African countries. Mobile money cross-border corridors are expanding but remain fragmented. The cost gap between what businesses pay today and what modern infrastructure can deliver is still significant and measurable.

For businesses operating now, the practical actions are: use fintech platforms rather than banks for cross-border payments where corridors are supported; use multi-currency wallets to reduce the frequency of FX conversion; and specifically for intra-African payments, ask providers whether they route via PAPSS or through correspondent banks, because the cost difference is up to 27%.

The infrastructure is improving. The costs are not yet where they need to be. The businesses that pay the least are the ones who know where to look.

How Duplo Simplifies Cross-Border Payments for African Businesses

Managing cross-border payments through correspondent banking chains, forced USD routing, and opaque FX rates is a cost your business should not be absorbing. Duplo is built to remove it.

Our platform gives African businesses access to real mid-market FX rates with no hidden charges, supports payments in 80+ currencies across 160+ countries, and includes multi-currency wallets so you hold and convert on your terms, not the bank’s.

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