Despite dominating global mobile money transactions with a staggering 74 percent share and processing $1.1 trillion across 1.1 billion accounts in 2024, Africa remains heavily dependent on physical cash, according to a new report released Wednesday by Affinity Africa in collaboration with the Mo Ibrahim Foundation and Yale’s International Leadership Centre.

The report, titled Africa: Why Cash Is Still King, highlights a paradox at the heart of the continent’s financial landscape. While mobile money has achieved remarkable reach—far surpassing traditional banking in serving the unbanked—over 90 percent of its value is withdrawn as cash immediately upon receipt. Daily commerce, from buying food to paying rent, continues to run predominantly on notes and coins.

“The gap between the financial infrastructure Africa has built and the economic behaviour it was supposed to change is vast,” said Tarek Mouganie, Founder and Group CEO of Affinity Africa. “The problem is incentives. Digital payments do not yet outperform cash where it actually matters. Until digital is cheaper, more reliable, more accessible and more useful than cash, the reality will not

The persistence of cash carries substantial economic costs. Small and Medium Enterprises (SMEs), responsible for roughly 80 percent of jobs on the continent, remain largely cash-based and receive less than 5per cent of bank credit, contributing to a $330 billion financing gap.

High remittance fees, averaging 8.7 percent compared to the UN’s 3 percent Sustainable Development Goal target, drain an estimated $8 billion annually from households. Meanwhile, 85 percent of African workers operate in the informal sector, shrinking tax bases and limiting governments’ ability to fund public services.

Emma Sky OBE, Founding Director of Yale’s International Leadership Center, described these challenges as “the cost of an unfinished transition.” She added, “Closing that gap is among the highest leverage moves available to anyone serious about Africa’s flourishing,” he said.

The report identifies three mutually reinforcing reasons for cash dominance: individual-level incentives where cash feels cheaper and more reliable for low-value transactions; structural barriers such as limited merchant acceptance, uneven agent liquidity, and regulatory fragmentation; and political economy factors where short-term interests of informal actors and incumbents favor the status quo.

According to the report, six structural factors are highlighted: high merchant discount rates (1-3% for digital vs. zero for cash), low merchant acceptance, identity and KYC barriers, agent float shortages, trust and fraud concerns, and misaligned incentives.

To break this equilibrium, the report outlines three coordinated actions to be pursued in sequence:

Make digital cheaper than cash for merchants through regulatory caps on fees, subsidies for small merchants, and mandatory digital acceptance for government services.

Mandate full interoperability with real-time settlement across platforms and borders, backed by penalties for non-compliance.

Create reasons to keep value digital by enabling credit, savings, and insurance products built on transaction data and open APIs.

Mo Ibrahim, Founder and Chair of the Mo Ibrahim Foundation, stressed the need for bold leadership: “Incremental reform will not be enough. The public sector must move faster in building regulatory clarity and strong institutions.”

With projections that one in four people globally will be African by 2050, the report warns that the window for transformative change is narrowing. Stakeholders—including governments, banks, mobile operators, fintech innovators, and development finance institutions—must align incentives and investments urgently to unlock the continent’s economic potential.

The full report provides detailed stakeholder responsibilities and international case studies, positioning a less cash-dependent Africa as an achievable outcome of deliberate policy choices.

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