Market News

By Jide Ajia

Cross-border payment challenges and fragmented financial regulations are slowing the expansion of African businesses beyond their domestic markets, industry leaders have said.

They made the remarks at the inaugural “The Borderless Experience,” organised by Condia in Lagos last Thursday. The event brought together senior executives from McKinsey & Company, Interswitch, Zest Payments and other stakeholders to discuss the challenges confronting businesses seeking to expand across Africa.

According to a statement, the major focus of the event was the gap between Africa’s growing demand for cross-border transactions and the financial infrastructure available to support businesses operating across multiple markets.

Speaking, the Divisional Chief Executive Officer, Payment Processing and Switching, Interswitch, Akeem Lawal, disclosed that about $100bn in cross-border payments moved out of Nigeria in the past year through unregulated channels.

According to him, the figure highlighted the scale of the opportunity available to financial technology companies and other businesses capable of developing solutions for Africa’s cross-border payment needs.

He said, “The problem today that I see, and that Interswitch is trying to solve, is that we now need to take the sophistication we have created in Nigeria and expand it outside of Nigeria.”

However, the Chief Executive Officer of Zest Payments, Kemi Manuel, noted that technology alone would not solve the continent’s cross-border payment challenges.

“The biggest challenge I think we have in Africa is regulation, and it’s fragmented,” Manuel said.

She explained that businesses, particularly fintech companies, face different licensing requirements when attempting to replicate the same business model across African countries.

The fragmented regulatory environment, she said, makes it more difficult for businesses to scale seamlessly across borders.

Manuel also pointed to early discussions among regulators around the possibility of establishing a shared licence that could eventually operate across several African countries.

Such a framework, she suggested, could help reduce some of the regulatory barriers confronting businesses seeking to expand across the continent.

The event, convened by Condia founder Benjamin Dada, also examined the broader challenges businesses face as they move from domestic operations into regional and international markets.

Dada said the conference was inspired by gaps he repeatedly encountered while reporting on African startups, particularly the practical difficulties entrepreneurs face when attempting to build and expand their businesses.

“I realised I didn’t want to build a startup. I wanted to build a product that solves the problem,” Dada said.

He added that entrepreneurs often approached him with concerns about securing licences, finding banking partners, hiring talent, and navigating other practical hurdles.

“A lot of people have talked to me about building a startup but can’t seem to find licences or banking partners, who to hire, or answers to some of the real-world challenges. Those are the conversations we want to create room for,” he said.

Earlier, a partner at McKinsey & Company, Ricky Asemota, stressed that business growth must be matched by the ability of organisations to absorb and implement new ideas.

“The capability that is proportionately valuable is not the ability to create new ideas; it’s going to be the ability to absorb them,” she said.

The organisers said The Borderless Experience would continue as a series focused on giving founders and operators practical access to the people building the financial infrastructure required to support cross-border business growth in Africa.