African Trade Moves Beyond the Dollar
The structural reliance on the US Dollar for intra-African trade is collapsing. As of December 04, 2025, the scarcity of greenbacks in major hubs like Lagos and Nairobi has forced a shift toward alternative settlement layers. Data from the Afreximbank December report indicates that transaction costs for intra-African commerce have dropped by 18 percent since the full-scale integration of the Pan-African Payment and Settlement System (PAPSS). This is not a matter of convenience; it is a matter of survival for businesses facing a 32 percent year-on-year devaluation of the Nigerian Naira.
The PAPSS Netting Mechanism
PAPSS eliminates the need for correspondent banking in New York or London. In the traditional model, a merchant in Accra buying goods from Kigali would convert Cedis to USD, then USD to Rwandan Francs. This circuitous route added 5 to 7 days of latency and up to 12 percent in fees. Under the new protocol active in 15 central banks as of this week, the clearing happens locally. The system performs a multilateral netting process at the end of each day. Only the net balance is settled in a hard currency, significantly reducing the demand for USD reserves.
The Efficiency Gap in Cross-Border Settlement
The following table illustrates the performance shift between legacy SWIFT-based settlements and the current PAPSS architecture observed in the fourth quarter of 2025.
| Metric | SWIFT Legacy (Dec 2023) | PAPSS Architecture (Dec 2025) | Improvement |
|---|---|---|---|
| Avg. Settlement Time | 5 to 7 Days | Real-time to 2 Hours | 98% faster |
| Intermediation Fees | 8% to 15% | 1% to 3% | 80% reduction |
| Currency Pairs Required | GHS/USD -> USD/RWF | GHS/RWF (Direct) | Direct Settlement |
Mobile Money as the New Primary Rails
Mobile money is no longer a retail-only phenomenon. Telcos like MTN and Safaricom have become the de facto central banks for the informal sector. In Kenya, M-Pesa transaction volumes reached a record 3.2 trillion KES in November 2025, per the Central Bank of Kenya monthly bulletin. The integration of ISO 20022 standards into mobile wallets has allowed these platforms to interface directly with regional clearinghouses. This technical bridge allows a small trader in Uganda to accept payments from a buyer in Zambia instantly, bypassing the commercial banking queue entirely.
Visualizing the Collapse of Settlement Latency
The reduction in time to finality for cross-border payments represents the most significant productivity gain in the region this decade. The chart below tracks the average days required to settle a cross-border transaction within the COMESA region from 2023 to the current data point of December 05, 2025.
The Technical Mechanism of Modern Financial Fraud
Increased accessibility has accelerated the sophistication of local payment scams. The most prevalent threat in December 2025 is the SIM-Swap Intercept 2.0. Fraudsters leverage social engineering to gain access to telco employee portals, allowing them to clone the victim’s identity on a virtual SIM. Once cloned, the attacker intercepts the one-time password (OTP) for mobile money wallets. Unlike traditional bank wire fraud, these transactions are near-instant and immutable. Recovery rates for mobile money theft currently sit below 4 percent, compared to 45 percent for legacy bank transfers. The vulnerability lies in the lack of multi-factor authentication that is independent of the GSM signal.
Regulatory Hardening and the 2026 Horizon
Central banks are moving from a reactive to a proactive stance. The Bank of Ghana recently mandated that all fintechs must implement biometric verification for transactions exceeding 5,000 GHS by the end of this month. This regulatory tightening is a precursor to the next major milestone. On January 15, 2026, the East African Community is scheduled to launch the Unified African Payment Interface (UAPI), which will seek to standardize the QR code payment landscape across six nations. Watch for the 2.5 percent cap on cross-border merchant fees as the next data point to validate the success of this integration.
