Digitnomics 
…AU Framework Targets Interoperability Across National Systems
By Admin
Africa is moving towards the creation of a single digital payments market that could allow money to move more seamlessly across national borders without requiring countries to first adopt a common currency.
The initiative, being developed by the African Union Commission (AUC) with support from the AfricaNenda Foundation, seeks to address regulatory and technical barriers that currently make cross-border digital transactions slow, costly and difficult for businesses, fintechs and consumers.
At the centre of the proposed framework is interoperability — enabling different national payment systems to communicate with one another under common rules, standards and safeguards.
Dr. Patrick Olomo of the African Union Commission said the objective is not to replace existing national payment infrastructure, but to create the regulatory conditions that would allow those systems to work together across borders.
According to him, Africa already has payment infrastructure and digital technologies capable of supporting faster transactions, but fragmented national rules remain a major obstacle.
The proposed framework would seek convergence in areas including licensing and licence passporting, interoperability standards, customer due diligence and anti-money laundering requirements, consumer protection, data governance, supervisory cooperation, settlement and liquidity arrangements.
For African fintechs, one of the biggest changes could come through licence passporting, under which a payment service provider licensed and regulated in one African market could potentially expand into another participating market without having to repeat the entire licensing process.
Such a system, subject to regulatory safeguards, could make it easier for digital payment companies to scale across multiple African markets and reduce one of the major barriers to the growth of Africa’s digital economy.
Jacqueline Jumah of the AfricaNenda Foundation said the regulatory harmonisation effort is intended to support a more connected African payments ecosystem rather than create another payment platform.
The initiative also recognises that African countries are at different stages of digital-payment development. Consequently, implementation is expected to take a readiness-based approach, with countries and regions that are more prepared potentially serving as pathfinders, while others build capacity and join progressively.
Nigeria and Ghana have been identified in discussions as a potential pathfinder corridor because their national payment systems already have connections that could support deeper cross-border integration.
The broader objective is to enable a transaction initiated on one national payment system to reach another country’s system without unnecessary technical, regulatory or settlement barriers.
The proposed architecture could also support technologies and standards such as ISO 20022, electronic know-your-customer (e-KYC) systems and regulatory sandboxes, alongside mechanisms for cross-border dispute resolution.
The move comes as Africa seeks to deepen digital commerce under the African Continental Free Trade Area (AfCFTA). Easier cross-border payments are seen as critical to enabling small businesses, online merchants, freelancers, fintechs and other digital businesses to trade across African markets.
However, the initiative faces a major challenge: countries must agree on common rules while retaining control over their national financial systems and currencies.
The proposed model therefore does not require African countries to abandon their currencies. Instead, it seeks to make the underlying payment systems and regulatory frameworks more compatible.
This distinction could be critical to the continent’s digital integration ambitions, particularly given the large number of national currencies, payment regulations and supervisory regimes operating across Africa.
The initiative is also expected to complement existing continental payment efforts, including the Pan-African Payment and Settlement System (PAPSS), by addressing the regulatory and policy barriers that can prevent payment systems from working efficiently across borders.
The proposed 10-year implementation roadmap envisages an initial phase focused on legal, institutional and standards foundations, followed by deployment of technical and regulatory mechanisms such as ISO 20022 and e-KYC, before moving towards wider interconnection of instant payment systems.
For consumers and businesses, the ultimate test will be whether the reforms translate into cheaper, faster and more predictable cross-border transactions.
For Africa’s technology sector, however, the significance could be much larger: a more interoperable payment environment could give fintechs access to a much bigger continental market without requiring them to build separate systems and navigate completely different regulatory regimes in every country.
The vision is therefore not a single African currency, but a continent where different currencies and national payment systems can work together as one digital payments ecosystem.
