Africa has emerged as the global leader in mobile money, processing an estimated US$1.1 trillion in transactions in 2024, yet cash remains the dominant payment method across much of the continent, according to a new report.
The report, titled Africa: Why Cash Is Still King, by Affinity Africa in collaboration with the Mo Ibrahim Foundation and Yale’s International Leadership Centre, highlights what it describes as a major contradiction in Africa’s financial system.
Despite accounting for 74 percent of global mobile money activity and supporting about 1.1 billion accounts, more than 90 percent of mobile money value is withdrawn as cash immediately after receipt, the report said.
It noted that everyday transactions, including food purchases, rent payments and small business activities, continue to rely heavily on physical currency.
“The gap between the financial infrastructure Africa has built and the economic behaviour it was supposed to change is vast,” said Tarek Mouganie, founder and chief executive of Affinity Africa.
He said digital payments must become cheaper, more reliable, more accessible and more useful than cash before consumer behaviour changes significantly.
The report warned that continued dependence on cash carries major economic consequences, particularly for small and medium-sized enterprises (SMEs), which account for about 80 percent of jobs on the continent.
Many SMEs remain largely cash-based and receive less than five percent of available bank credit, contributing to an estimated $330 billion financing gap, according to the report.
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It also highlighted the high cost of sending money across borders, with remittance fees averaging 8.7 percent — significantly above the United Nations Sustainable Development Goal target of three percent.
The report estimates that these high costs drain about US$8 billion annually from African households.
Meanwhile, about 85 percent of African workers operate in the informal economy, reducing tax revenues and limiting governments’ ability to fund public services.
Emma Sky, founding director of Yale’s International Leadership Centre, described the situation as “the cost of an unfinished transition”, arguing that completing Africa’s shift toward digital finance could deliver significant economic benefits.
The report identified three main reasons cash remains dominant: consumer preference for the reliability and familiarity of cash, structural barriers such as limited merchant acceptance and weak digital infrastructure, and incentives that continue to favour informal cash-based systems.
Among the obstacles identified are high merchant fees for digital payments, limited acceptance points, identity verification challenges, shortages of mobile money agents’ liquidity, concerns over fraud and weak regulatory coordination.
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To accelerate digital adoption, the report recommends reducing costs for merchants through fee controls and incentives, expanding interoperability between payment platforms, and creating stronger reasons for people to keep money digitally through access to credit, savings and insurance products.
Mo Ibrahim, founder and chair of the Mo Ibrahim Foundation, said stronger leadership and clearer regulation were needed to drive the transformation.
“Incremental reform will not be enough. The public sector must move faster in building regulatory clarity and strong institutions,” he said.
The report warned that with projections showing one in four people globally will be African by 2050, the continent faces a narrowing opportunity to build a more inclusive financial system.
It called for greater coordination among governments, banks, mobile operators, fintech companies and development institutions to ensure digital finance translates into broader economic growth.
