When I first talked about cross-border payment between Africa and Asia, one of the most frequently asked question was, “Aren’t there Wise (formerly known as Transfer Wise), Flutterwave, Stripe, PayPal, PayStack, already available?

Yes, my friend, I know, but these products don’t cater to the needs of Africa-Asia trade.  

First of all, we need to differentiate between whether we are discussing remitting money out of Africa or receiving money.  

For instance, if you are a freelancer needing to receive payments from your global clients, yes, all of the services mentioned would allow you to receive money. 

Many enable you to create a web link and collect payments from clients. Some, like Flutterwave, allow you to hold foreign currencies, others like TransferWise, allow you to accept payment in your local currencies. 

HOWEVER, if we are talking about funds leaving the continent that is a different story. 

Can I send money from Nigeria to China?

>> Wise: No 

>> AirWallex: No

>> Flutterwave: No ( Sure, but Flutterwave doesn’t operate in China )

>> Stripe: No ( Sure, but you need an US bank account )

>> Paypal: No ( Sure, but your merchants can’t connect Paypal to their local accounts in China, which defeats the purpose ) 

I can give you “sure, but ” for all of the above…

The point is moving money out of Africa, exchanging forex and paying your suppliers are EXTREMELY difficult. 

My hypothesis for this are as follow, 

Priority of the players: The services mentioned are global remittance services popular in established countries. Albeit fast growing, Africa comprises less than 5% of the global trade in 2023 according United Nations Conference on Trade & Development.  

Service design: The primary target markets for many established platforms are developed markets in US, and EU for example. The payment methods are geared towards users with access to traditional banking services, which let’s be honest more than half of the population in Africa are unbanked. On top, the fees associated with mid-sized cross-border payment can be pretty high.

Regulatory barriers: Due to trade deficit and inflation experienced by many African countries, governments are cautious in approving global remittance platform. Take Ghana for example, on Nov, 2023, the government banned companies providing remittance services without approval, including Wise, Transfer Go, PayPal, etc. Citing Section 3.1 of Ghana’s Foreign Exchange Act, 2006, the government prohibits companies dealing in foreign exchange without a license.

Fragmented markets and fluctuating exchange rates: There are 54 countries and 42 currencies in Africa . Using Ghana as an example again, recently the inflation rate has hit a record high 40%. Beyond, Ghanian Cedi has devalued significantly. A case in point, for example, 100 Cedi two years ago was worth 14 USD. Yet today, the value of the currency has halved, with the same 100 Cedi now worth only 7 USD

Familiarity and Trust, on both ends: Establishing trust and familiarity takes effort. The fact is, over 3,000 ethnic groups and over 2000 languages spoken in Africa. Even within a country, the culture can be incredibly diverse and each with its own unique identity. Considering the number of user segments, customer education and product awareness are concepts that are basic, yet extremely important.

In short, STOP telling me that there are companies like Stripe and Wise. Duh, I know. 

The reality is that there isn’t a solution localized enough to power the fast growing trade activities between Africa and China, particularly for SMEs.

So yes, I do believe that it is an exciting problem to investigate, and I look forward to my upcoming trip to Africa with my bestie, Howard, as we navigate the landscape, meeting local merchants, bank operators and officials.

Ciao ciao for now.

Peace!