The Death of the Middleman in African Trade
Capital in Africa is finally moving at the speed of light. For decades, a merchant in Nairobi trying to pay a supplier in Lagos had to route their transaction through a correspondent bank in New York or London. This process was not just slow; it was a tax on growth. By the time the US Dollar was sourced and the SWIFT fees were deducted, the transaction cost often exceeded 10 percent. As of December 04, 2025, that era is ending. The friction that once defined the continent is being incinerated by a collision of mobile money dominance and the Pan-African Payment and Settlement System (PAPSS).
The numbers tell the story. In the 48 hours leading up to this morning, trading volumes across the PAPSS network reached a record high. This surge follows the December 1st Reuters report detailing how the system is now saving African businesses an estimated $5 billion annually in transaction costs. We are witnessing the systematic dismantling of the dollar’s hegemony in intra-African trade. It is no longer a question of accessibility; it is a race for total market capture.
The Titans of the Digital Ledger
M-Pesa and MTN MoMo are no longer just ‘convenient’ tools for the unbanked. They have become the primary rails for institutional liquidity. Safaricom’s recent 2025 Q3 earnings report, released late last month, highlighted a 19 percent jump in business-to-business (B2B) transaction volume. This isn’t just people sending money home. This is the industrialization of mobile money. In Kenya, the Central Bank’s decision on December 2 to maintain the base lending rate at 13 percent has forced investors to look for yield within these digital ecosystems rather than traditional debt instruments.
MTN Group is countering this by aggressively expanding its Mastercard partnership. By issuing virtual cards to millions of MoMo users, they are bypassing the traditional banking license requirements that once protected legacy institutions like Standard Bank. The risk is high. Regulatory scrutiny is tightening in Ghana and Nigeria, where ‘e-levies’ and digital taxes are being used by cash-strapped governments to extract value from this digital boom. However, the reward for those who control the wallet is a direct line to the fastest-growing middle class on the planet.
The Technical Architecture of Liquidity
The real ‘Alpha’ lies in the settlement layer. While the front-end user sees a simple app interface, the back-end is a complex web of real-time gross settlement (RTGS) integrations. PAPSS works by allowing a buyer to pay in Kenyan Shillings while the seller receives Nigerian Naira. The system clears the transaction instantly by matching net flows across participating central banks. This eliminates the need for ‘Nostro’ accounts, which previously tied up billions of dollars in idle liquidity.
According to Bloomberg’s latest market analysis from November 28, the divergence in central bank policies across the continent has created a volatile landscape. While Nigeria fights inflation with aggressive hikes, South Africa has begun a cautious easing cycle. In this environment, the ability to settle trade locally without being exposed to USD/ZAR or USD/NGN fluctuations is a massive competitive advantage for multinational corporations operating in the region.
| Payment Rail | Settlement Time | Avg. Fee (2025) | Primary Market |
|---|---|---|---|
| SWIFT (Traditional) | 3 to 5 Days | 7.5% – 12% | International |
| M-Pesa Global Pay | Instant | 2.5% – 4% | East Africa |
| MTN MoMo Business | Instant | 1.8% – 3.5% | West/South Africa |
| PAPSS Network | Near-Instant | < 1.0% | Pan-African |
The Infrastructure Bottleneck
Data connectivity is the only thing standing in the way of a total digital takeover. In the 48 hours since the December 2nd spectrum auction in Zambia, it has become clear that private capital is pivoting from fintech apps to the physical towers that power them. You cannot run a billion-dollar economy on 3G speeds. The investment in subsea cables like Equiano and 2Africa is finally trickling down to the last-mile consumer, but the urban-rural divide remains a significant risk factor for investors betting on total market penetration.
Smart money is currently flowing into ‘Asset-Light’ fintechs that leverage existing agent networks. Companies like Flutterwave and Chipper Cash are no longer just processors; they are becoming neo-banks that offer high-yield savings products in local currencies. This shift is siphoning deposits away from the ‘Big Five’ traditional banks, forcing a radical consolidation of the financial sector. The reward for the consumer is lower fees, but the risk for the systemic stability of traditional banking cannot be ignored.
The Milestone to Watch
The next critical inflection point arrives in late February 2026. The African Continental Free Trade Area (AfCFTA) secretariat is scheduled to release the results of the Phase II pilot for the ‘Single Digital Currency’ protocol. This is not a speculative crypto-asset; it is a unified digital ledger intended to peg local currencies to a common trade unit for internal settlement. Watch the volume of ‘Swaps’ on the PAPSS platform over the next 90 days. If the current 12 percent month-over-month growth trend holds, the total volume of non-dollar trade on the continent will surpass $50 billion by the end of Q1 2026.
