Realising The Potential Of Digital Payments: A Window Of Opportunity For Trade In Sub-Saharan Africa

By Aida Diarra, Senior Vice President & Head of Sub-Saharan Africa at Visa

To truly understand the role and potential of digital payments in enabling trade in Sub-Saharan Africa, an interrogation of the current payments landscape on the continent is needed; more specifically; two areas that can accelerate value for trade in the region: interoperability and cross border transactions.

Adoption of digital payments has increased in the past 12 months; rapid change was experienced during the pandemic where consumers stayed at home due to various lockdown restrictions and merchants were challenged to find new ways of operating. According to the Visa COVID-19 CEMEA Impact Tracker, contactless payments and eCommerce shopping grew exponentially, with merchants and consumers showing sustained preference for digital payments.

The evolving payments industry combines a wide variety of financial industry stakeholders, including fintechs, banks and telecommunication companies to name a few. Interoperability is key to the sustained growth of the industry and fosters a harmonious, digitally connected ecosystem that benefits economies. This is even more critical in a region like Sub-Saharan Africa where we have a vibrant mix of traditional and new players who can help solve some of Africa’s most stubborn financial service challenges.

Together we need to prioritize several areas to realise the true benefits of interoperability. Firstly, regulation that offers a clear approach on areas such as risk management, safety and security standards, fair and open access to interoperable solutions and consumer protection. Secondly, the development of resilient infrastructure that is in line with international best practice and lastly initiatives that accelerate digitisation of payments and drive access to market relevant solutions for all.

Our strategy at Visa is to open our network to support a broad range of players that are developing new commerce experiences and transitioning to digital channels. We do this in several ways, including investment, partnership, and engagement. There are many examples of work we have done in various countries on the continent to support our strategy in these areas. We have worked with traditional and new financial services companies to develop new products and capabilities to reach the underserved and underbanked consumers.  We’re also continuing to foster simple and easier acceptance of digital payments for merchants with more than 40 partners across Sub-Saharan Africa.

Lastly, we’re always looking at how to remove the friction that sometimes comes with digital payment experiences by enabling the next generation of connected devices with recent launches of solutions like Tap-to-phone in South Africa. 

The second question to address is how to enable and realize the potential of international payments. Cross-border transactions have opened the door to a world of opportunity for many businesses including ours. E-commerce is a solution that enables intra-regional trade, according to new research in the Visa Global Merchant eCommerce Study, a large majority (87%) of merchants believe that expanding online sales into new markets is one of their company’s biggest growth opportunities.^[1]As technology pushes the pace of innovation faster, all retailers can seize the opportunity to become more relevant to potential buyers around the globe.

In Africa e-commerce trade remains small and regulations have not kept pace with digital developments^[2]. Given some of the challenges, we need to ensure that intra-regional trade fulfils its promise of spurring economic growth, attracting investment, and supporting the national development goals in Africa. Creating the right environment domestically – including one that enables competition and fosters responsible innovation – is a good starting point but given the inherent interconnectedness of the digital economy, this alone is not enough. As an ecosystem we need to continue to engage to ensure that local enterprises are not denied the benefits of the global reach of the internet especially in those countries still challenged in enabling digital commerce.

In conclusion, for Sub-Saharan Africa to realise the full potential of digitization, the region will have to focus on these three things. Firstly, creating the right environment domestically – including one that enables competition and fosters responsible innovation. Secondly, governments continuing to play a key role in facilitating digital trade both at a macro-level through trade agreements like the African Continental Free Trade Agreement but also at a micro-level by enabling regulations that support economic formalization , making it easier segments like SMEs to be on-boarded by digital payment services providers. Finally, using the current window of opportunity to bring our perspectives, influence outcomes, and ensure that the benefits of digital trade are widely shared.