Looking for growth? Africa is the continent that every country, trade minister, and business owner should turn their heads toward. According to the Africa Development Bank’s latest macroeconomic report, it confirmed that the African continent is set to maintain its position as the second-fast-growing region, just next to Asia. According to the report, next year “up to 41 countries across the continent will achieve an economic growth rate of 3.8% and in 13 of them, growth will be more than 1 percentage point higher than in 2023.” These are incredible statistics that demonstrate the growth opportunity across Africa due to the surging population and booming GDP growth.  Africa is forecasted to outpace global growth averages throughout 2024.

The report also counted 11 African nations among the world’s twenty fastest-growing economies this year – enviable, especially to our neighbors in North America and Europe. Additionally, according to the International Monetary Fund’s GDP growth tracker, the African region significantly outpaces South America’s GDP growth, with a real GDP growth rate of 3.5% versus South America’s 1.4%. On the other hand, Africa still maintains a close range behind Asia, which leads with 4.4% to Africa’s 3.5%. However, in the coming years, according to Statista, Africa will experience a significant population boom, with an estimated 2.5 billion inhabitants by 2050. This, in turn, will significantly close the population gap with Asia by 2100. As GDP growth typically grows as the population does, the GDP growth gap could be narrowed down within the next few years. 

Needless to say, not only will there be tremendous population growth, but foreign direct investment, employment opportunities, standard of living, purchasing power, and more will grow exponentially as countries that have been listed as “commodity-dependent” will expand into diversified services fit for their young, digital population.

Why doesn’t money “follow” the data from Africa the way it does in other continents, like into Asia or South America? Often, companies considering expansion tell us that they see Africa as “more complex,” “more corrupt,” and more “volatile” than other emerging continents.  

However, if you spend any time with a CEO or politician from Asia or South America – it’s clear that they also operate in markets with high barriers to entry and difficult operational environments.

Perception is the enemy of foreign investment in Africa.  This is why the biggest new entrants to the continent in the last decade have come directly from Asia and South America – where they feel the market is similar, rather than more difficult.

The diversity of currencies, varying regional regulations, and lack of legacy financial infrastructure are hurdles to rolling out a pan-African business in a snap. However, fintechs have flooded the market to fill this gap for the last 15 years.  

Now, those with the most longevity, experience, and long-term consistent growth are making it easy to do business across the continent.

These fintechs (and their supporting ecosystem of service providers) know that Africa’s currency diversity is a strength, not a weakness. They also know that African fintech infrastructure rivals, if not surpasses, many other markets.

And finally, there are more than enough professional services providers, banks, and other partners with which to scale in Africa.

So, while many new entrants to African commerce are quick to blame other reasons for their difficulties in scaling, the only major obstacle to their growth (aside from their own perceptions of Africa) is cost.

Cross-border payments still cost African and African-based businesses too much. African businesses shouldn’t have such a high price (in time or fees) to move into other African or G20 currencies or to make transfers across the continent or into Europe. Yet, they do.

At a recent gathering of corporate treasurers operating in Africa, the single biggest complaint was that the internal policies only allowed them to partner with a single bank. This policy and the outlook on what available partners should be is beyond outdated.

Now, these costs may surprise many businesses as they begin their expansion to African markets. However, it is not a problem of currency diversity, financial infrastructure, or service.
Instead, the problem is the knock-on effect of how businesses in Africa have not been prioritized by non-African partners. Historically, limited choices in foreign exchange, cross-border transfers, and international market access still drive these higher costs of doing business today.  

These costs have also made Africa’s fintech sector the most inventive. Our tradition of financial innovation, dating back to mobile money, directly results from African founders and fintechs actively challenging and dismantling this system. In every sector they’ve expanded into, they’ve provided more and better choices. This ecosystem of fintech and alternative financing is nearly identical to what resolved the higher costs of cross-border business in Asia and Latin America as well, and their economic growth proves it is worth the effort.

African businesses need more choice. The opportunity (and pressure) of international liquidity should help it finally arrive.

In doing so, however, we must be vigilant that the systems evolving to serve new expansions into Africa also work for African businesses. This means using partners that can facilitate direct African-to-African currency exchange. Not just to protect the exchange rate of the currencies themselves but also to maintain the speed of value exchange.

We cannot allow our system to evolve into one where business owners have days or weeks-long wait times to access their capital. We must also watch carefully to ensure that any business looking to capitalize on African value invests equally in African success. This should include hiring employees in Africa and encompass partnering with African companies, using African banks, and routing payments through African-licensed payments services providers (as well as holding and doing business in African currencies).

Africa is already a benchmark for fintech invention and is quickly becoming the ideal standard for economic growth. Within the next decade, we will be the global hub of international talent, as well as home to one of the most important consumer markets in the world. We can arrive at this future even more quickly if we can cut costs for African businesses while maintaining our high expectations for those companies that seek to join us here.