Africa's Fintech Infrastructure and the Case for Interoperability-Driven Growth

Africa's fintech sector is at a pivotal inflection point. For years, the continent's financial systems have been fragmented by high cross-border transaction costs, inconsistent regulations, and underdeveloped digital rails. Yet, these challenges are now being met with innovative solutions from companies like Onafriq, which is building the infrastructure to unify markets and empower small and medium enterprises (SMEs). As Dare Okoudjou, CEO of Onafriq, has emphasized, the key to unlocking Africa's economic potential lies in addressing regulatory predictability, reducing fragmentation costs, and embedding SMEs into the digital economy. For investors, this represents a rare opportunity to back platforms that are not just solving problems but redefining the rules of the game.

The Problem: Fragmentation and High Costs

Africa's financial landscape is a patchwork of systems. Cross-border transactions often rely on correspondent banks outside the continent, settled in foreign currencies, which inflate fees and delay settlements. According to a report by Onafriq, these inefficiencies cost SMEs up to 15% of transaction value in fees and exchange rate markups. Regulatory fragmentation exacerbates the issue: 54 countries, 40+ currencies, and a lack of harmonized policies create a "spaghetti bowl" of compliance hurdles for fintechs. Okoudjou has argued that without regulatory alignment, Africa's financial systems will remain siloed, stifling the intracontinental trade growth envisioned by the African Continental Free Trade Area (AfCFTA).

The Solution: Interoperability as a Strategic Lever

Onafriq's approach is to build the "glue" between these fragmented systems. In 2025, the company partnered with the Pan-African Payment and Settlement System (PAPSS) to launch a cross-border payment service in Ghana, enabling direct transactions between mobile money wallets and bank accounts. This pilot reduces costs by bypassing traditional correspondent banking and allows SMEs to trade across borders in minutes rather than days. The service is part of a broader strategy to connect 1 billion mobile money wallets and 500 million bank accounts across 40 African markets.

To further scale this vision, Onafriq has integrated stablecoin technology via a partnership with Circle, using USDC to facilitate faster, lower-cost remittances and cross-border payments. This move aligns with the AfCFTA's goal of reducing intra-African tariffs and trade barriers, creating a flywheel effect where improved payment infrastructure drives commerce, which in turn fuels demand for more infrastructure.

The Investment Case: Timing and Scalability

Why now? Three factors converge to make this the optimal moment to invest in interoperability-driven fintechs:
1. Regulatory Momentum: The AfCFTA and regional blocs like ECOWAS are pushing for harmonized trade policies, creating a tailwind for cross-border payment solutions.
2. Market Size: Africa's SMEs represent 30% of GDP and 60% of employment, yet only 15% have access to formal financial services. Platforms like Onafriq are addressing this gap by embedding SMEs into digital ecosystems.
3. Capital Efficiency: Onafriq's recent $100 million equity and debt financing round underscores investor confidence in its ability to scale. The company's agency banking model-partnering with local agents to deliver financial services in underserved areas-also addresses infrastructure gaps while maintaining financial viability.

Okoudjou has stressed that success hinges on more than technology. "Regulatory predictability and local funding are non-negotiable," he noted in a Forbes Africa interview. This means investors must prioritize platforms with deep regulatory relationships and diversified funding sources, both of which Onafriq has secured.

Risks and Mitigations

Challenges remain. Infrastructure limitations in rural areas and inconsistent regulatory enforcement could slow adoption. However, Onafriq's agency banking model and partnerships with PAPSS and Circle provide a blueprint for navigating these hurdles. Additionally, the company's focus on SMEs-a segment with $3.4 trillion in annual cross-border trade potential-positions it to capture significant market share as AfCFTA gains traction.

Conclusion: Building the Future of African Finance

Africa's fintech infrastructure is no longer just about financial inclusion-it's about economic integration. Platforms like Onafriq are proving that interoperability can turn fragmented markets into a unified ecosystem. For investors, the case is clear: the next decade will be defined by companies that build the rails connecting Africa's SMEs, consumers, and institutions. The time to act is now.