Africa (AFR)

Licensing, Authorisation & Market Access

Africa has no bloc-wide payments licence; market access is governed by per-country, central-bank-led regimes. In South Africa, the South African Reserve Bank operates payment-system oversight under the National Payment System Act 78 of 1998, with SARB as overseer of the national payment system, and is transitioning to an activity-based authorisation framework. That framework introduces a function-based approach with seven exempt payment activities — e-money issuance, instrument issuance, acquiring, third-party services, remittances, clearing and settlement — under which registration, client-fund segregation and minimum capital are required. This shift from bank-sponsorship toward direct activity-based authorisation is the single most significant market-access change for South African non-bank PIs and EMIs, since it enables direct non-bank client-fund holding without mandatory bank sponsorship. The framework is in final pre-implementation rather than open draft consultation: SARB published a third version in May 2026 with a comment deadline of 15 June 2026 and intends to publish the final version in Q3 2026.

In Nigeria, the Central Bank of Nigeria licenses PSPs under four categories — Switching & Processing, Mobile Money Operations, Payment Solution Services, and the Regulatory Sandbox — per the December 2020 categorisation circular and BOFIA 2020. Crucially for the bank vs non-bank distinction, only Mobile Money Operators and Payment Service Banks may hold customer funds, structuring the entire non-bank market. The CBN sets PSB structure via its Guidelines for Licensing and Regulation of Payment Service Banks, requiring at least 25% of access points in rural or underserved areas to drive financial inclusion — tying market-access licensing directly to inclusion policy.

In Kenya, the Central Bank of Kenya vests PSP authorisation under the National Payment System Act No. 39 of 2011 and the NPS Regulations 2014, with four categories: Electronic Retail PSP, Designated Payment Instrument Issuer, E-Money Issuer and Small E-Money Issuer. PSP business is prohibited unless authorised, and the regime sets capital requirements ranging by category. This tiered authorisation underpins the M-Pesa-dominated market.

Outlook

The SARB final Authorisation Framework and Exemption Notice are expected in Q3 2026, moving South Africa decisively to activity-based, direct non-bank authorisation with client-fund segregation — the bloc's most consequential near-term licensing change. Nigeria's and Kenya's regimes are mature and stable, with the fund-holding boundaries (MMOs/PSBs in Nigeria; trust-account model in Kenya) remaining the defining structural features. The trajectory across W1a is established, with South Africa as the active locus of change.

Conduct, Safeguarding & Financial Promotions

Safeguarding arrangements diverge sharply across the three core jurisdictions, and the bank-PSP versus non-bank-PI/EMI distinction is central. In South Africa, the SARB introduces a two-tier e-money regime: Tier 1 covers issuers above R5m monthly value with R8m capital, and Tier 2 covers those below R5m with R5m capital. The regime enables non-banks to hold client funds with segregation and no mandatory bank sponsorship — the single biggest market-access change for South African non-bank e-money issuers, replacing the sponsorship model with client-fund segregation plus tiered minimum capital. The framework remains in final pre-implementation. On conduct, the reformed NPS objects place consumer protection with the Financial Sector Conduct Authority, while SARB's primary objects are safety, efficiency, integrity and soundness, with financial-crime prevention and inclusion as secondary objects. This twin-peaks split determines which regulator a PSP answers to on conduct versus prudential matters.

In Nigeria, safeguarding operates through a structural prohibition: the CBN restricts customer-fund holding to Mobile Money Operators and Payment Service Banks only, with PSSPs, PTSPs and switches prohibited from holding funds. This forces non-MMO fintechs into bank or MMO partnerships, directly shaping commercial structuring for non-bank PIs and EMIs.

In Kenya, the CBK requires consumer safeguards via a trust account at a CBK-licensed bank plus compliance with the Consumer Protection Act 2012 for PSP applicants. The trust-account model is the Kenyan safeguarding default for e-money customer funds.

Outlook

South Africa's segregation-based, sponsorship-free model — once finalised in Q3 2026 — will be the most liberalising safeguarding shift in the bloc, opening direct non-bank fund-holding. Nigeria's fund-holding prohibition and Kenya's trust-account default are stable structural features unlikely to change near-term. The trajectory across W1b is established.

Stablecoins & Digital Money

The bloc has moved from prohibition toward licensing, and Nigeria's digital-money policy has shifted decisively from a failed CBDC toward a regulated-stablecoin model. The Nigeria Investments and Securities Act 2025 brings digital assets, including stablecoins, under SEC regulation, mandating reserve backing, AML/KYC compliance, independent audits and regular reporting — the first statutory stablecoin and digital-asset perimeter in Nigeria. cNGN, described as the first regulated naira-backed stablecoin, launched as a public pilot in February 2025 under the SEC Regulatory Incubation Program and was designed to operate alongside the eNaira. Its issuer attribution is treated as unverified, attributed to an African Stablecoin Consortium affiliate rather than a confirmed named entity, and its status is pilot rather than full commercial launch.

The pivot follows the eNaira's underperformance. Nigeria's eNaira — the first African retail CBDC, launched October 2021 — reached only around 700,000 downloads or wallets by 2024-2026, roughly 1.3% of financial accounts, and is widely regarded as having failed its adoption objectives, with private dollar stablecoins outcompeting it. (The original wallet figure was a quantitative error and has been corrected and downgraded to Assessed confidence.) The Central Bank of Nigeria announced a task force in October 2025 to explore an official stablecoin, signalling a potential pivot away from the underperforming eNaira.

In South Africa, the FSCA classified crypto as financial products under the FAIS Act — the first major African economy to move to structured regulation — while Project Khokha continues as a wholesale, not retail, CBDC experiment. In Kenya, the National Treasury introduced a draft Virtual Asset Service Providers Bill in March 2025 for a comprehensive supervisory framework covering licensing, AML and consumer protection.

Outlook

Kenya's VASP Bill and the CBN's stablecoin task-force outcome are both expected to develop through 2026, as forward instruments. The cNGN issuer attribution and pilot-versus-operational status remain to be confirmed. Sourcing here is overwhelmingly Tier-3, with available Tier-1 corroboration (an IMF Selected Issues Paper) under-cited — a flagged gap. The trajectory is escalating, with Nigeria leading the regulated-stablecoin shift.

Operational Resilience & Critical Infrastructure

There is no bloc-wide DORA-equivalent for operational resilience; each central bank addresses resilience independently. In South Africa, the SARB issued a directive on cybersecurity and cyber-resilience within the national payment system, requiring payment institutions and system operators to meet formal resilience and cyber-control standards — the bloc's nearest DORA-analogue, setting a cyber-control baseline for both bank and non-bank PSPs. In Nigeria, the Central Bank of Nigeria prioritises cyber resilience via the Nigeria Payments System Vision 2028, which prioritises security, trust, interoperability and cyber resilience, acknowledging that digitalisation risk requires stronger cybersecurity and fraud-monitoring. PSV 2028 frames Nigeria's medium-term resilience and fraud-control direction for the whole payments stack.

The operational-resilience case is reinforced by a wave of 2025 incidents. The African payments and telecom sector experienced major 2025 breaches at Cell C, MTN (in South Africa and Ghana) and Telecom Namibia, with the Nigeria Data Protection Commission fining MultiChoice NGN766m for inadequate data protection. Regulator-forced disclosure and data-protection fines are raising the operational-resilience compliance bar across the bloc.

Outlook

Resilience regulation will remain national rather than bloc-wide, with the SARB directive and Nigeria's PSV 2028 the principal reference points. The trajectory is established, though the escalating cadence of breaches and data-protection enforcement suggests rising compliance expectations. The SARB cyber-resilience directive rests on a single Tier-3 source and is carried at Assessed confidence.

Scheme & Network Compliance

Scheme compliance in the bloc is shaped by the differing legal status of PCI DSS and by the emergence of homegrown card and QR schemes. In Nigeria, the Central Bank of Nigeria mandates PCI DSS compliance via the Guidelines for Card Issuance and the Guidelines on Operation of Electronic Payment Channels: all institutions processing, transmitting or storing cardholder data must comply, with non-compliance attracting CBN sanctions. PCI DSS is thus enforced as a regulatory mandate rather than merely a scheme contract, raising card-data compliance stakes for both bank and non-bank players. In South Africa, by contrast, PCI DSS is not law but is enforced through contracts with banks and card networks, mandatory for card-processing businesses, and layered with POPIA data obligations.

The bloc also carries under-indexed homegrown rails. Interswitch dominates the Nigerian scheme-switching layer as originator of Verve, Africa's homegrown card scheme, with the switching layer also including UPSL, Etranzact and NIBSS; NIBSS launched the interoperable NQR national QR standard in March 2021. Homegrown Verve and NQR reduce reliance on global card schemes — a structural competitive feature of the Nigerian non-bank PI/EMI market.

Outlook

The scheme-compliance picture is stable: PCI DSS remains a regulatory mandate in Nigeria and contractual in South Africa, while domestic schemes Verve and NQR continue to reduce dependence on global networks. No imminent scheme-rule changes are signalled this cycle. The trajectory is stable.

Payment Corridor Dynamics

Corridor dynamics are the most active area of the bloc, driven by PAPSS expansion and local-currency wallet corridors attacking high remittance costs. PAPSS is a pan-African real-time gross settlement infrastructure publicly launched on 13 January 2022 by the African Union and Afreximbank to support AfCFTA trade, settling cross-border transactions in local currencies with Afreximbank as settlement agent. By December 2025 it had expanded to roughly 19 countries, connecting over 160 commercial banks and 14 payment switches; Kenya's PesaLink joined in February 2026, linking 80-plus PesaLink participants to 160-plus PAPSS banks. The Nigeria-Ghana wallet corridor went live in February 2026, allowing Nigerian businesses to send naira directly to Ghanaian recipients in cedis without dollar conversion — eliminating the dollar leg and reducing FX cost and friction for SME cross-border trade.

The commercial problem these rails address is cost. Sending $200 to sub-Saharan Africa cost an average 8.4% in 2024, the highest of any region, with intra-African corridors running 7.4-8.3% against the G20 3% target. The highest-cost corridors are under formal diagnosis: a joint IMF-World Bank technical-assistance report in November 2025 diagnosed the South Africa-Zimbabwe corridor against the G20 Roadmap 3% remittance-cost target for 2027, where cost runs as high as 12.7%.

Outlook

The corridor trajectory is escalating and improving. PAPSS local-currency settlement, PesaLink integration and the Nigeria-Ghana wallet corridor are progressively displacing offshore USD/EUR clearing and the associated cost. The IMF/World Bank diagnosis frames the SA-Zimbabwe corridor as a 2027 policy-reform target. Coverage is concentrated on Anglophone corridors; Francophone West and Central African corridors (BCEAO/UEMOA, BEAC/CEMAC) are under-indexed and flagged.

Industry Structure & Commercial Dynamics

The structural future of Nigerian and pan-African payments is being decided by a contest over financial infrastructure among the major non-bank players, set against severe macro stress. The Nigerian payments switching market is concentrated, dominated by Interswitch (the pioneer), UPSL, Etranzact and NIBSS, whose NIP rails process trillions of naira annually — concentration that shapes pricing power and consolidation dynamics. In 2026, having survived a currency collapse and funding freeze, Flutterwave, Paystack and Moniepoint compete not just on payment volumes but for control of the underlying financial infrastructure. The infrastructure-control contest among the big three defines the structural trajectory.

The macro backdrop is the naira's collapse: it lost more than 70% of its value against the dollar between 2023 and 2024, compressing dollar-priced fintech valuations while inflation climbed above 30%. This currency stress is the driver behind valuation compression, M&A and the funding freeze. Against that, the sector expanded: the African fintech sector grew from around 450 companies in 2022 to over 1,000 by 2024, and the cross-border payments market is projected to triple from USD 329bn in 2025 to USD 1 trillion by 2035.

Outlook

The trajectory is escalating, with consolidation and infrastructure control the dominant themes. Note that specific M&A and funding events (Flutterwave/Mono, Moniepoint Series C) are tracked as discrete commercial events in W13, while W6 carries the structural trend. The growth and market-size figures derive largely from single vendor sources without independent corroboration and are carried at Assessed confidence — a flagged gap.

Legal & Litigation

Enforcement and litigation are escalating across the bloc, concentrated in Nigeria's regulator-led actions and Kenya's broadening PSP perimeter. In 2025 the Central Bank of Nigeria fined Access Holdings NGN138 million for inadequate Know Your Customer controls linked to fraud cases — a bank-PSP enforcement action raising compliance cost and liability exposure. More structurally, effective January 2025 the CBN directed NIBSS to debit the settlement accounts of commercial banks that receive fraud proceeds, shifting accountability toward banks with inadequate transaction monitoring. This settlement-account debit is a direct liability-shift mechanism reshaping bank fraud-monitoring incentives.

In Kenya, a landmark 2022 High Court decision extended the PSP definition under the NPS Act to include companies utilising SWIFT banking infrastructure, meaning even back-end processors may require licensing. This broadened definition expands the Kenyan licensing perimeter to back-end and SWIFT-using processors, with implications for both bank and non-bank entities.

Outlook

The trajectory is escalating in Nigeria, where regulator-led KYC enforcement and the NIBSS fraud-proceeds debit mechanism are reshaping bank incentives, and stable in Kenya, where the 2022 ruling continues to define the licensing perimeter. Continued CBN enforcement on KYC and fraud-monitoring is the dominant near-term legal dynamic.

Merchant Acquiring & Risk

Merchant-acquiring obligations are tightening sharply, led by Nigeria's automated-monitoring mandate. Under CBN Circular BSD/DIR/PUB/LAB/019/002, Nigerian PSPs must deploy automated merchant-level transaction monitoring, with implementation roadmaps due by 10 June 2026 and full compliance by 10 March 2028 — imposing a defined 2026-2028 compliance build cost on acquirers and non-bank PSPs. Reinforcing merchant control, Nigeria's NIBSS now requires POS devices to carry GPS tracking for recertification as a fraud-mitigation and merchant-control measure, adding device-compliance cost for Nigerian acquirers. This under-indexed merchant-acquiring operational signal is surfaced here.

In South Africa, PSPs are accountable institutions under FICA: they must conduct merchant CDD, maintain an approved Risk Management and Compliance Program, monitor transactions and file Cash Threshold Reports above ZAR 24,999.99. FICA accountable-institution status sets the South African acquirer AML/CDD baseline and reporting threshold for both bank and non-bank players.

Outlook

The trajectory is escalating, dominated by Nigeria's phased merchant-monitoring mandate reaching full compliance by 10 March 2028, with roadmaps due 10 June 2026. South Africa's FICA duties are stable. GPS-on-POS recertification adds a continuing device-compliance and merchant-control lever for Nigerian acquirers.

Product Innovation & Market Development

Instant payments and open banking anchor the bloc's product-innovation story. NIBSS Instant Payment processed NGN1.08 quadrillion in 2024, a 79.6% increase, making it the sixth-largest real-time payments system globally and the first African IPS to reach 'Maturity' on AfricaNenda's Inclusivity Spectrum — making Nigeria a global instant-payments leader and the model for African IPS development. South Africa's PayShap, on the Rapid Payments Programme and active since 2023, processed over 100 million transactions in its first year, raised the per-transaction limit to R50,000 and targets low-value instant payments under R3,000, driving A2A migration away from cards. The NIBSS National Payment Stack upgrades to ISO 20022, supporting real-time payments with multiple ISO 20022-format IDs per transaction for better tracking, built-in fraud detection and cross-border support.

Open banking is consolidating into the major players. Flutterwave's January 2026 acquisition of Mono brings open-banking financial-data access, identity verification and account-to-account payments in-house, supporting a regional shift away from card rails toward bank-based methods. This is the thematic open-banking product view; the discrete M&A event is tracked in W13. Market entry for novel products is supported by the CBN Regulatory Sandbox Framework (2021), which allows fintech innovators to test new products for up to six months under supervision before applying for a full licence.

Outlook

The trajectory is escalating. NIP's scale and maturity, PayShap's growth, the ISO 20022 stack upgrade and open-banking in-housing collectively accelerate the A2A-over-cards shift. The CBN sandbox remains the controlled market-entry path for novel payments products. Nigeria and South Africa lead bloc product development.

Consumer Protection & APP Fraud

Consumer-protection and APP-fraud liability is a fast-escalating frontier in an under-indexed emerging market. The Central Bank of Nigeria is drafting APP-fraud rules establishing structured reimbursement mechanisms, strict investigative timelines and Board-level fraud oversight, shifting liability for user-authorised scams across Nigeria's payment system. Mandatory APP-fraud reimbursement would impose UK-PSR-style liability on Nigerian PSPs — a material conduct cost for both bank and non-bank players. The policy driver is scale: CBN data show Nigerian banks and customers lost a combined NGN134.48bn to fraud between 2020 and 2025, against attempted fraud of NGN187.79bn, across ATM, POS, e-commerce, internet and mobile banking channels. This fraud-loss scale sits behind the APP-fraud rules, NIBSS debits and merchant-monitoring mandates.

In Kenya, the Consumer Protection Act 2012 provides safeguards ensuring the interests and rights of payment-service consumers are protected and enforced — setting Kenya's consumer-protection baseline for payment services.

Outlook

The CBN's draft APP-fraud reimbursement rules are expected to develop through 2026 as a forward instrument at consultation stage. The trajectory is escalating, with Nigeria's reimbursement frontier — an under-indexed emerging-market development — the dominant near-term consumer-protection theme. South Africa's FSCA conduct mandate and Kenya's CPA provide the surrounding consumer-protection regimes.

AML/CFT & Financial Crime (Sentinel-fed)

The AML/CFT intelligence in this module is sourced from the Sentinel.gi feed; original illicit-finance analysis belongs to FIM and is not re-analysed here. According to the Sentinel feed, at its October 2025 Paris plenary the FATF removed Nigeria and South Africa, along with Mozambique and Burkina Faso, from its list of jurisdictions under increased monitoring after successful on-site visits. The delisting eases enhanced-due-diligence friction and narrows risk premia on intra-African flows — directly relevant to correspondent-banking access analysed in W12. (Source: sentinel.fatf-oct-2025-plenary.)

Also per the Sentinel feed, South Africa's AML reforms included a beneficial-ownership register under the Companies Act, expanded supervision of designated non-financial businesses and professions, and FSCA AML-related fines rising from R25m in 2022 to R175m in 2024. The sharply higher FSCA AML fines and the beneficial-ownership register raise the South African financial-crime compliance baseline for PSPs. (Source: sentinel.financeinafrica-sa-aml-reforms.)

Beyond-carry analysis of these positions — including the illicit-finance dimensions of the delisting and of informal-channel remittance migration — is routed to FIM via cross-monitor flags.

Outlook

As a sentinel-fed module, the AML/CFT outlook is carried rather than independently assessed here. The FATF delistings and South Africa's AML reforms point to an improving compliance posture, with the principal payments-relevant implication being eased correspondent-banking access (W12). Further AML developments will be carried as the Sentinel feed updates.

Correspondent Banking, Settlement & Access

The analytical spine of this module is the bank versus non-bank access asymmetry, and this cycle it is being actively reshaped. Global banks terminated relationships with 127 African institutions during 2024-2025, citing compliance costs and reputational risk, with average correspondent-banking settlement still taking three to five business days — the structural access problem confronting the bloc's bank-PSPs. The consequences are severe: South Africa's FATF grey-listing experience showed terminated correspondent relationships forced an estimated 70% of SADC cross-border remittances into informal channels, a financial-inclusion and illicit-finance risk routed to FIM.

Two developments are engineering around this. PAPSS enables intra-African settlement in local currency via Afreximbank as settlement agent, relieving companies of reliance on foreign-currency flows through correspondent banks outside Africa — the core commercial value proposition that bypasses offshore USD/EUR clearing. And FATF grey-listing reduces capital inflows by an average of 7.6% of GDP largely through higher compliance costs and de-risking, so the October 2025 FATF delisting of Nigeria and South Africa is a direct easing of correspondent-banking access, quantifying the macro upside of delisting.

Outlook

The trajectory is escalating and improving. PAPSS local-currency settlement and the FATF delistings are together narrowing risk premia and recapturing formal-rail flows, but persistent de-risking (127 terminated relationships) and the informal-channel migration of SADC remittances remain structural drags. The formal-rail recapture is the central PAPSS opportunity for the bloc.

Commercial Intelligence (M&A, Investment & Product)

The bloc's commercial calendar over the trailing twelve months is dominated by consolidation among the major non-bank players and pan-African product launches. Flutterwave acquired Nigerian open-banking startup Mono in an all-stock deal completed December 2025 and announced 5 January 2026; the deal value was not publicly disclosed, though stated to be significantly higher than the roughly $17.5m Mono had raised (a BusinessDay headline cited up to $40m, but the value remains officially undisclosed). The deal brings open-banking, identity-verification and A2A payment capability in-house — a marquee consolidation in African payments. Flutterwave subsequently secured a national microfinance banking licence in Nigeria in April 2026 via its Mono acquisition, allowing it to hold customer deposits and issue loans for the first time in its biggest market — transforming it from a PSP into a fund-holding institution. (This licence event could not be rendered as a standard commercial-event type and is carried as a W13 market-access claim.)

Moniepoint raised over $200m in equity through a Series C round led by Development Partners International's African fund in October 2025 to expand financial inclusion, underpinning its infrastructure-control contest with Flutterwave and Paystack. In 2025 Moniepoint also acquired Bancom Europe — gaining UK regulatory licences — and secured approval to take a majority stake in Kenya's Sumac Microfinance Bank; the values were not publicly disclosed, and the Sumac stake is approved or pending completion. On the product side, Afreximbank launched PAPSSCARD, the first pan-African card scheme (announced June 2025), to advance financial inclusion and intra-African trade under AfCFTA — directly challenging Visa/Mastercard dominance and complementing PAPSS rails.

Outlook

The trajectory is escalating. M&A and funding among the big three Nigerian players continue to concentrate control of African financial infrastructure, while PAPSSCARD signals the rail layer extending into card schemes. Forward watch items include completion of Moniepoint's Sumac stake and the operational rollout of PAPSSCARD.