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Nigeria and South Africa’s differing approaches to digital payments reflect two distinct paths set to converge in 2026, as regional interoperability takes shape.
Sub-Saharan Africa’s payments landscape is entering a decisive phase. The rapid adoption of digital payment systems, including mobile money, fast payment systems (FPS) and nascent central bank digital currencies (CBDCs), is transforming how people transact, save and send money.
Yet this transformation is unfolding amid fragmented infrastructure, uneven regulation and persistent informality.
For firms and investors, Nigeria and South Africa offer a clear contrast: one led by public-sector CBDC experimentation, the other by private-sector innovation within a robust regulatory framework.
Together, they highlight the opportunities and risks shaping Africa’s payments ecosystem as interoperability and regulatory convergence accelerate.
Nigeria’s CBDC still showing potential
Launched in 2021, Nigeria’s eNaira made it one of the first countries globally to introduce a retail CBDC, aimed at boosting inclusion, lowering transaction costs and reducing cash use.
Policymakers hoped the eNaira would lower transaction costs, enhance traceability, and serve as a digital backbone for government-to-person (G2P) transfers.
However, uptake has been limited. An International Monetary Fund (IMF) working paper published in May 2023 estimated that fewer than one per cent of Nigerians used the eNaira in its first year, reflecting low public trust, limited awareness and poor interoperability with private wallets.
Regulatory centralisation has ensured oversight, but has also constrained innovation. For example, the Central Bank of Nigeria’s (CBN) initial restrictions on mobile money operators and slow integration of open banking frameworks, which hindered the CBDC’s ability to complement and enhance existing payment systems.
Despite these early frictions, Nigeria’s legal and supervisory ecosystem is evolving rapidly. The CBN has strengthened frameworks for electronic money issuers (EMIs), data protection and anti-money laundering/counter-terrorism financing (AML/CTF) compliance, creating a clearer path for fintech collaboration.
In the design paper for the eNaira, the CBN notes that Nigeria is one of the few countries to pair a CBDC rollout with parallel reforms to digital identity and regulatory sandboxes, which are critical preconditions for scaling adoption.
For investors, Nigeria represents both risk and opportunity. The risk stems from digital literacy gaps, cybersecurity vulnerabilities and the threat of reputational damage in the event that state-led systems underperform.
The opportunity lies in Nigeria’s untapped market potential: World Bank data shows that more than 39 percent of the population was using mobile internet in 2023, and research by Rome Business School found that the country’s fintech sector attracted more than a third of Africa’s total venture capital funding in 2024. In addition, the government increasingly views digital finance as a fiscal and inclusion tool.
If interoperability between the eNaira, mobile money and regional payment networks materialises in 2026, Nigeria could emerge as a hub for diaspora remittances, digital tax collection and programmable public transfers.
South Africa’s market-led approach
South Africa has taken a bottom-up approach to digital payment innovation. The 2023 launch of PayShap, an FPS jointly managed by the South African Reserve Bank (SARB) and BankservAfrica, is a public–private partnership grounded in prudential discipline.
PayShap enables instant, low-cost person-to-person (P2P) transfers across banks, with interoperability at its core.
South Africa’s well-established regulatory environment offers strong consumer protection, competition policy and data governance that provide a secure foundation for payments innovation.
The country is one of Africa’s most advanced in terms of integrating FPS, traditional banking and fintech ecosystems. This framework lowers systemic risk and promotes resilience, particularly around operational continuity and cybersecurity.
However, although technological integration is high, financial inclusion has plateaued in South Africa, especially among low-income users and informal enterprises.
The high fees charged by banks at PayShap’s launch created an entry barrier, despite the service being positioned as a low-cost option.
The initial pilot involved four local banks, and saw more than 260m transactions processed in two years. The maximum transaction limit has since increased from $175 to $2,750, and the service has extended to 10 participant banks for the next phase.
However, PayShap is yet to penetrate low-income areas. The opportunity for entrants lies in bridging this inclusion gap through overlay services that connect PayShap with mobile wallets, e-commerce platforms and regional payment corridors.
For payments firms, South Africa offers a predictable, rules-based market with low regulatory uncertainty but higher competition barriers.
A key advantage is regulatory interoperability: the SARB works with the Southern African Development Community (SADC) to harmonise standards, aligning its FPS with cross-border systems such as the Pan‑African Payment and Settlement System (PAPSS) and other regional rails.
This cross-border readiness positions South Africa as a gateway for firms targeting intra-African trade and high-value business-to-business (B2B) transactions.
Two sides of the same coin
Nigeria’s top-down CBDC model and South Africa’s bottom-up FPS approach reflect Africa’s regulatory duality, yet both aim for efficient, inclusive and interoperable systems.
Nigeria’s state-led experimentation underscores the urgency of institutional trust, design flexibility and stakeholder inclusion in CBDC deployment; South Africa’s market-led system highlights the value of competitive neutrality and private innovation.
There are lessons to be learnt from both approaches. For digital payment firms, the key takeaway is that growth in Africa’s financial infrastructure will favour hybrid models that align private efficiency with public oversight.
Sub-Saharan Africa’s principal risk is not technological but institutional, with weak consumer protection, uneven supervision and limited cybersecurity capacity amplifying exposure to fraud, AML/CTF breaches and reputational harm.
Firms expanding into the region should, therefore, treat regulatory compliance and risk management as strategic differentiators.
Looking ahead to 2026
During 2026, Africa’s payments landscape is set to pivot toward regional convergence and digital interoperability. Three dynamics will define this phase:
- Integration of public and private payment rails, with CBDCs and FPSs designed to complement each other rather than compete. In effect, countries can have both if central banks ensure compatibility and interoperability.
- Regulatory harmonisation under the African Continental Free Trade Area (AfCFTA) framework, with standardised licensing, capital and consumer-protection regimes for fintechs and EMIs.
- AI-driven compliance and data governance to enhance AML, fraud detection and cross-border supervision.
Governments across the continent are also digitising fiscal flows such as tax collection, public procurement and social transfers, thereby creating predictable transaction volumes and improving transparency.
Firms that are able to integrate with these G2P channels will find themselves embedded in the next generation of national payment architectures.
The convergence of mobile money, FPS and CBDC ecosystems will also reshape Africa’s remittance corridors, while reducing costs and reliance on external correspondent banks.
Firms should act now to ensure they are adequately prepared for the changes ahead in this region.
To begin with, businesses must align their models with both national frameworks and regional standards such as the Pan-African Payment and Settlement System (PAPSS), the Common Market for Eastern and Southern Africa (COMESA) payment rails and the African Continental Free Trade Area (AfCFTA) protocols.
Early and proactive engagement with regulators will not only ensure compliance but also strengthen institutional credibility.
Operational resilience should be embedded into business processes through the development of offline and low-data functionalities that address infrastructure volatility across markets.
Mobile money has been one of the biggest payment facilitators in Africa, and firms should explore building strategic partnerships with local banks, mobile network operators and regional payment hubs to gain access to liquidity networks and cross-border settlement rails.
In addition, governance and compliance frameworks should position AML/CTF controls, data privacy safeguards and consumer protection measures as integral elements of the value proposition rather than mere regulatory obligations.
Moreover, interoperability should remain a core principle, with APIs and payment infrastructures designed to facilitate seamless regional integration.
Finally, firms that establish an early presence in emerging cross-border corridors such as the Malawi–Zambia route stand to secure a first-mover advantage within COMESA’s new local-currency settlement structure under the Digital Retail Payments Platform, ahead of broader market entry and potential competitor fragmentation.
As interoperability gains traction, Africa’s payment systems could evolve from regional enablers into global connectors.
The continent’s emerging frameworks, linking CBDCs, mobile money and fast payment networks, are likely to influence international standards on digital inclusion, remittance efficiency and real-time settlement. In this context, Africa is not merely adapting to the global digital economy but actively shaping it.
Firms and policymakers that engage early in this transformation will help define the next phase of cross-border finance: one that is faster, more transparent and distinctly African in its innovation.
