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African fintech companies could soon find it easier to expand across the continent as industry players push for a common regulatory framework that would allow licensed payment firms to operate across borders without starting the licensing process from scratch in every country.
The proposal, known as licence passporting, is emerging as a key component of efforts by the African Union Commission (AUC) and AfricaNenda Foundation to harmonise regulations governing cross-border digital payments.
Dr. Patrick Conteh, Chief Executive Officer, Africa Fintech Network, said Africa already has much of the technological infrastructure required to support a connected digital payments market, but fragmented regulations remain a major barrier to fintech expansion.
According to him, a fintech that is licensed and supervised in one African market currently has to undergo another licensing process when it seeks to enter another country.
“If you’re in Ghana, you’re licensed and provided by Central Bank of Ghana, you want to go to Nigeria, you start from zero. You start the process afresh. You want to go to Gambia, you start zero, you start the process afresh,” Conteh said.
He argued that Africa now needs a common regulatory rulebook that would make it easier for licensed and supervised payment service providers to access other African markets.
“What we see is an attempt, or efforts, at defining a common rulebook, which is really good, and it’s doable. Africa needs that common rulebook,” he said.
Conteh said licence passporting could provide an immediate opportunity for putting such a framework into practice by creating easier market access for fintech companies.
Under the proposed arrangement, a fintech licensed in one participating African country could potentially operate in another participating market without repeating the entire licensing process, subject to agreed standards, safeguards and regulatory oversight.
Conteh said the African Fintech Network had already begun work around the concept, including discussions with banking supervisors across the continent.
He disclosed that the network had presented the licence-passporting proposal to the Committee of African Banking Supervisors, an arm of the Association of African Central Banks, with supervisors from about 40 central banks involved in the discussions.
A technical working group was subsequently established to examine the proposal, while further consultations have been held with industry stakeholders and central banks.
Conteh said the objective was to create a regulatory mechanism that could turn Africa’s growing digital payment infrastructure into genuine continental market access for fintechs.
“Africa has technical wheels,” he said, pointing to the rapid development of instant payment systems and mobile money across the continent.
“The infrastructure, the building, and their scaling very, very fast. So that’s not the problem. As she said, the binding constraint is the fragmentation of rules, the regulations.”
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He said the regulatory challenge could prevent fintechs from taking full advantage of the continent’s rapidly expanding digital economy.
The proposed licence-passporting model is being developed alongside the broader regulatory harmonisation initiative supported by the AUC and AfricaNenda.
The wider framework seeks convergence in areas including licensing and passporting, interoperability standards, anti-money laundering and customer due diligence, consumer protection, data governance, supervisory cooperation, and settlement and liquidity arrangements.
Jacqueline Jumah of AfricaNenda Foundation said the organisation’s consultations had extended beyond governments and central banks to include fintechs, private-sector operators and other participants in the digital payments ecosystem.
She said regional consultations had been held in Johannesburg, Kigali, Abidjan and Lagos, with further engagement planned in North Africa.
According to Jumah, the objective is to ensure that the proposed framework reflects the realities of all the major players involved in Africa’s digital payment ecosystem.
Dr. Patrick Olomo of the African Union Commission also stressed the importance of bringing fintechs and other private-sector players into the process, noting their growing role in Africa’s financial ecosystem.
For fintech companies, the potential impact of licence passporting could be significant. Instead of spending months navigating separate regulatory processes and compliance requirements in every new market, companies could potentially use an existing licence as the basis for expanding into other participating jurisdictions.
This could lower market-entry costs, shorten expansion timelines and enable African fintechs to scale across multiple countries more rapidly.
It could also increase competition among payment providers and expand access to digital financial services for consumers and businesses.
Nigeria and Ghana have emerged as potential pathfinders for aspects of the broader framework because their national payment switches are already interconnected.
According to AfricaNenda, countries with relatively mature instant payment systems and existing cross-border connections could provide a starting point for testing the proposed regulatory convergence.
However, the initiative is expected to take a readiness-based approach because African countries are at different stages of digital financial development.
Conteh said the priority should be to ensure that the regulatory framework allows Africa’s existing digital payment infrastructure to deliver its full value across borders.
The emerging debate therefore shifts the focus from whether Africa has the technology to support cross-border digital payments to whether its regulatory systems are ready to allow African fintechs to operate as continental businesses rather than country-by-country companies.
