News / Africa could cash in on benefits from innovative cross-border payment plan

African forwarders have given a mixed response to the news from DP World that it has signed an MoU with PayPal to develop a programme to speed up cross-border payments, which have long hobbled Africa’s growth ambitions.

Describing it as a “first-of-its-kind” digital payments initiative, the terminal operator and commerce platform are looking to see cross-border transactions executed in minutes rather than days, and in some cases weeks, at a lower cost and with greater transparency.

Chief executive of DP World Ahmed bin Sulayem said the collaboration with PayPal would simplify transactions across the globe and “enable businesses of every size to grow, move faster, and operate more efficiently across markets”.

While not singling-out any specific location, the initiative could prove a boon to Africa’s supply chains, which are experiencing something of a seismic shift, thanks to increased sourcing from Asia and a boost and diversification of exports across the continent.

Despite this, the region has struggled with paperwork, bureaucracy, and payment practices, sources having told The Loadstar that until there was a harmonious approach to cross-border trade, any global ambitions would be hobbled.

However, one forwarder told The Loadstar, rather bluntly: “It won’t work for Africa.”

And many interested parties relate issues of debilitating African trade to a lack of trust between governments, and have suggested that until all this was resolved, technical solutions would have a limited impact – although there are some that believe such solutions could help.

Jacob van Rensburg, head of research and development at the South African Association of Freight Forwarders, welcomed the DP World initiative, noting that “one of the frictions of intra-Africa trade is precisely the slowness, opacity, and cost of cross-border payments”.

Pointing out that there have been some developments on this front in pockets of the continent, “especially in the east”, Mr van Rensburg said that, more broadly, the continent had struggled to make any headway on this.

“A digital payments platform of the kind DP World and PayPal propose (faster settlement, greater transparency, lower cost) could materially reduce those frictions and thereby support increased trade flows across the continent,” he told The Loadstar.