Africa’s Cash Dependency: Why the Future Belongs to Electronic Payments

Across Africa today, a quiet revolution is underway. Mobile money services and online payment platforms are gaining ground, facilitating intra-African trade — both at national and cross-border levels. From small traders in local markets to emerging entrepreneurs in urban centers, these platforms are opening up new pathways for transactions, savings, and remittances.

Yet, despite these advances, the overall adoption remains modest. Only about 40% of adults in Sub-Saharan Africa currently use mobile money services (World Bank, 2023). This means a majority of the population is still tied to traditional cash-based systems, especially within the continent’s dominant informal sector.

The Power and the Limitation of the Informal Sector

Africa's informal economy is both its strength and its challenge. It accounts for roughly 80–90% of total employment (ILO, 2023) and contributes about 40% of the continent’s GDP (African Development Bank, 2022). This sector plays a critical role in absorbing labor and supporting livelihoods across urban and rural communities.

However, within this vast economy, cash is king. It is estimated that 70–90% of informal business transactions rely on cash. This heavy dependence limits the sector’s potential — restricting access to credit, complicating taxation, and inhibiting the transparency required for scaling up businesses and formal trade.

Consider Nigeria, Africa’s largest economy: there, cash is used in about 90% of all transactions (Central Bank of Nigeria, 2021). The predominance of informal businesses is a major driver of this figure. While cash offers convenience and familiarity, it also holds back wider economic growth and digital financial inclusion.

The Case for Transition: Toward an Electronic Payment Economy

If Africa is to truly unlock its economic potential and drive sustainable development, it must transition from a cash-backed economy to a more robust, electronic payment-driven economy. This shift offers immense benefits:

• Job creation in fintech, banking, and digital infrastructure

• Increased business diversification and cross-border trade

• Greater financial inclusion for women and youth

• Improved tax revenue for governments through formalized transactions

• Better credit access for small businesses based on transaction histories

Yet, for this transformation to succeed, key barriers must be addressed — starting with the high costs associated with electronic payments. Transaction fees and service charges remain prohibitive for many small businesses and low-income users.

The Role of National Banks and Regulators

National central banks and financial regulators have a crucial role to play. By lowering transaction fees and encouraging more competition among digital payment providers, they can make electronic payments more attractive and accessible.

I firmly believe that if these costs are reduced, millions of Africans would adopt digital payments more readily, integrating them into their daily lives and business operations.

Moreover, policies that encourage interoperability between mobile money platforms and traditional banking systems will be vital. Governments must also invest in expanding internet access and digital literacy, particularly in rural areas where cash remains dominant.

Personal Perspective: Why I Choose Digital Over Cash

On a personal level, I have experienced the advantages of electronic payments first-hand. In countries like Nigeria — which boasts one of the most advanced online banking systems in Africa — I deliberately choose digital transactions over cash.

Why? Because they allow me to maintain accurate, traceable, and organized financial records — a critical factor for managing my personal and business finances effectively. Digital payments also make cross-border trade easier and faster, removing the friction that often comes with cash-based transactions.

Conclusion: Africa Stands at the Threshold of a Payment Revolution

Africa stands at a decisive moment. The tools for transforming its payment ecosystem already exist. By reducing costs, building trust, and encouraging digital adoption at every level — from street vendors to formal enterprises — the continent can accelerate its journey toward a modern, inclusive, and diversified economy.

The future belongs to those who embrace it. And for Africa, the future is digital.