How payment, logistics failures hurt Africa’s intra-trade growth

Entrepreneurs and economic experts alike argue that unless these twin challenges are urgently addressed, the dream of a prosperous and interconnected Africa will remain elusive.

CEO of Simba Group — a company with operations in seven African countries, Mr David Ndelwa, bluntly illustrated the situation: “We say we have a free trade area, but in practice, it doesn’t function effectively.

The differences in payment systems and the lack of transport infrastructure between countries make it nearly impossible to trade freely,” he said during the Unlocked Africa Business Forum held recently in Cape Town, South Africa.

 Mr Ndelwa pointed to the irony of needing a visa to move goods and people between African countries, or lacking a direct road from Dar es Salaam to Maputo, despite being part of the same regional economic blocs.

“Unlike the European Union, where movement of people and goods is seamless, we still struggle with logistical bottlenecks and border delays that kill the spirit of trade,” he said. Perhaps more worrying is the state of Africa’s payment systems.

With over 50 countries each having its own currency and banking regulations, cross-border transactions are complex and heavily reliant on the US dollar — an inefficiency that pushes up the cost of doing business.

“A unified payment system could drastically reduce barriers. Right now, to trade with a neighbouring country, I need to convert to dollars, and that’s costly,” Ndelwa explained.

According to Chief Economist at Standard Group, Mr Goolam Ballim, the path to fixing this lies in financial innovation. He sees FinTech — particularly mobile money services — as Africa’s best chance at creating a home-grown solution to its payment woes.

“Africa is not just catching up; it's leapfrogging through mobile-based transactions. The key is to standardise and link these services across countries so that we build an ecosystem that enables free-flowing trade,” Mr Ballim said.

The expert emphasises that Africa’s biggest need is connectivity — digitally and physically — backed by its abundance of resources, including human capital. He believes that if harnessed properly, Africa can become a global model for inclusive, digital-driven trade. But the payment puzzle is only half the problem.

Infrastructure remains a formidable barrier. Inadequate roads, expensive air transport, and poor logistics services are driving up the cost of goods and limiting the movement of entrepreneurs across the continent.

A Tanzanian, Director of Ona Safari, a tourism company, Mr Julius Mkondo, noted: “Access to capital is our biggest problem.

If financial institutions could align their priorities with the needs of sectors like tourism, we would scale faster,” he said, pointing out Tanzania’s ambitious goal to attract five million tourists annually. He added that accommodation is a key area with huge growth potential but remains stifled due to limited investment and financing.

In response to such needs, Head of Business Banking at Stanbic Bank Tanzania, Mr Charles Mishetto, a subsidiary of Standard Group, said their focus has been on formalising informal businesses to help them access credit.

“Most banks still ask for collateral, but for us, we consider your transaction history. However, for that to happen, we must first support your formalisation. That’s why we run campaigns to register and structure small businesses,” Mr Mishetto said