By: Rita Enemuru

ON March 30, 2026, the Federal Government released a report on cross-border digital payments and identity under the African Continental Free Trade Area (AfCFTA), estimating access to a $3.5 trillion continental market. The pledge was bold: hassle-free transactions, reduced trade barriers, and increased opportunities for Micro, Small and Medium Enterprises (MSMEs). The core of this vision is that digital payments can open up growth and inclusion. However, in the midst of this optimism, a curious question arises; can digital payments really empower small African businesses, or will infrastructure gaps constrain their effectiveness? With Africa driving towards economic integration, the answer will be to whether AfCFTA will be a growth engine or another overambitious policy hampered by reality. The core of AfCFTA is the desire to boost intra-African trade, which currently accounts for about 15 per cent of the continent’s total trade, according to the African Development Bank. This compares to Europe’s 60 per cent and Asia’s 40 per cent. In this regard, digital payments are increasingly seen as a critical enabler, simplifying how businesses exchange value across borders.

For MSMEs, which makes up approximately 90 per cent of the businesses in Africa and about 50 per cent of the GDP (World Bank), access to efficient payment systems is vital. Traditionally, cross-border transactions have been cumbersome, costly, and heavily reliant on intermediaries such as correspondent banks. These inefficiencies usually discourage small businesses from operating internationally. In comparison, online payment systems provide an opportunity to minimize such obstacles, making transactions faster, cheaper, easier, and more secure. Digital platforms significantly enhance cash flow by minimizing delays and transaction costs, factors that determine survival and expansion of small businesses. For instance, the Pan-African Payment and Settlement System (PAPSS), enables companies to operate with the local currencies instead of the US dollar, thus minimizing the exchange rate risks and transaction costs. This enhances efficiency and also strength intra-African trade, by making cross-border transactions more accessible to smaller enterprises.

However, payments alone are not enough. Trust remains a key obstacle, particularly to international trade. This is where digital identity systems like Bank Verification Number (BVN) and National Identification Number (NIN) are crucial. These systems help reduce fraud, and foster confidence in online transactions by validating the identities of both individuals and companies thereby making the digital economy more secure and trustworthy. The World Bank has consistently highlighted the importance of digital identification in promoting financial inclusion. In its Identification for Development (IDAD) initiative, the bank notes that over 850 million people globally lack formal identification.This limits their ability to participate in formal economies. Digital identity coverage can provide millions of entrepreneurs in Africa with access to banking, credit, and cross-border markets.

For Nigeria, integrating identity systems with digital payments would simplify the process of conducting business. It would also strengthen property rights, an essential pillar of economic freedom by making transactions traceable, secure, and legally recognised. These advantages highlight the transformative potential of digital payments when supported with good identity systems. Regardless of these opportunities, the AfCFTA digital payments depends on infrastructure. In most parts of Africa, unpredictable electricity, poor internet connection, and poor logistic systems are a major problem. Although access to the internet by the Sub-Saharan Africans is at only 36 per cent, the accessibility in the rural areas where most of the MSMEs are located is even lower according to the World Bank. The advantages of cross-border digital payment systems will be inaccessible to a big part of the population without a stable connection. Furthermore, logistics remains a significant limitation. Efficient payment systems have limited value if goods cannot be transported across the borders in a timely and cost effective manner. The African Development Bank has reiterated the need for better road networks, noting that logistics costs in Africa can be up to 50 per cent higher than the global average.

Beyond infrastructure, regulatory fragmentation presents another significant barrier. The varying laws in payment, data protection laws and financial policies in various countries present uncertainty to businesses operating internationally. The Heritage Foundation Index of Economic Freedom highlights the importance of regulatory efficiency in driving economic growth. To maximise the potential of AfCFTA, member states must strive to harmonise rules and cut bureaucratic hurdles. Also, governments should not over-regulate the digital economy, as too many rules and regulations may suffocate innovation and restrict the scalability of fintech solutions. Rather, policy makers should focus on creating an enabling environment that encourages competition, safeguards property rights and allows market forces to drive innovation. While the potential of AfCFTA digital payments is undeniable, it is important to note that technology alone cannot address these structural issues. Poor infrastructure, policies inconsistency and capacity gaps must be addressed. This, however, does not diminish the value of digital innovation but emphasizes the need for a coordinated and holistic approach.

The Fraser Institute has long maintained that economic freedom which is defined as minimal government intervention, good property rights and open markets are some of the major factors that drive prosperity. AfCFTA is an opportunity available to African nations to embrace these ideals and have a more unified and competitive economic environment. The launch of the cross-border digital payments report is a significant step towards realizing the AfCFTA vision. For MSMEs, the benefits are substantial, including expanding market access, reduced transaction costs and increased competitiveness. Nevertheless, these benefits will fully be realised only if the underlying challenges are effectively addressed. Ultimately, AfCFTA is more than a trade agreement; it is a pathway to economic trans formation.

Its success will depend on whether African countries can move beyond policy declarations to meaningful implementation. If properly executed, digital payments could become the backbone of a truly integrated African market, one in which MSMEs are not just participants, but key drivers of growth and prosperity.

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