Fintech improvements to cross-border payment systems could create more than a million remote jobs in Africa and bring the continent further into the global digital economy.
Specifically, reducing so-called payment frictions—systematic or infrastructure issues that cause fees, delays, or failed transactions—by 50%, could generate 900,000 to 1.1 million jobs, says research by Harvard Business School Assistant Professor Ebehi Iyoha. Confronting Africa’s high cross-border transaction costs could also boost economies and incomes in the region.
Multinational firms are increasingly turning to Africa for digital talent, including software engineers, graphic designers, and content creators. Africa’s exports of digitally delivered services more than doubled to $36 billion between 2023 and 2011, according to the World Trade Organization. However, limited access to efficient and affordable international payment systems could exclude millions from the boom and shrink a powerful pipeline for global companies.
You have this friction to simply getting money from one person, who’s willing to pay, to another person, who’s willing to do the work.
“You have this friction to simply getting money from one person, who’s willing to pay, to another person, who’s willing to do the work,” Iyoha says. “These frictions are important barriers to transactions and jobs.”
Iyoha partnered with Omolola Amoussou, chief research economist at the African Development Bank Group, and Gigbanc CEO Paul Okundaye to analyze the links between payment systems and economic growth in Africa. Their findings, detailed in the August working paper “The Role of African Fintechs in Facilitating Telemigration,” will be featured in the peer-reviewed book African Businesses and Multiple Value Creation: Impact through Technology and Digitalization by World Scientific Publishing.
Africa’s booming fintech market
Outdated banking infrastructure in sub-Saharan Africa has made it one of the most expensive places to send money, according to the World Bank. Payment costs can top 8.7% to 12.6% of a transaction’s value, outstripping the 3% target set by the UN Sustainable Development Goals. Added costs can make remote work unaffordable for both workers and their prospective employers.
Payment-system innovations by African fintech startups—the fastest-growing financial technology market in the world—have dramatically cut payment frictions. More than $1 billion of venture capital flowed to fintech companies in Africa last year alone, according to the French investment firm Partech Partners. In 2022, the Nigerian fintech firm Flutterwave became the continent's most-valued startup at $3 billion.
Nonetheless, more fintech-led improvements to payment systems are needed if Africa’s virtual-work sector is going to significantly expand within the global economy, the authors conclude.
“The problem isn’t about access to capital,” says Iyoha, who’s part of the Entrepreneurship Unit at HBS. “It’s about financial challenges tied to how people get paid.”
Banking innovation could boost economies
The researchers used World Trade Organization information to size up trade flows from remote work across 200 countries from 2011 to 2023. They used World Bank remittance data to tally transfer costs, and information from Pitchbook to track fintech firms operating in cross-border payments.
The researchers found that:
Remote work exports shrink by 4.7% for each 10% increase in transaction costs.
Countries with the most fintech development face fewer payment frictions, cutting them entirely in some cases.
Reducing payment costs by 50% could add $3 billion to remote work exports, a 24% increase.
“Fintech penetration and improvements can actually undo most payment frictions,” Iyoha says. “Some of the (highest transaction) frictions can be just eliminated.”
The team also used Gigbanc, a Nigerian startup that provides banking services to remote workers, as a case study. The firm surveyed 225 African remote workers and found that 72% were paid in two more currencies.
Many respondents used multiple platforms, the cheapest option for a particular currency, to manage transaction costs and routinely grappled with delays, fees, and reliability issues. Adopting fintech solutions could reduce monthly fees from payment processing by an average of $319 per user, a significant gain in income, the paper says.
Could policy speed change?
Startups don’t grow in a vacuum and the right policies could help maximize fintech potential, the authors write. Ideally, regulations would:
Support innovation alongside integrity. Nigeria, Kenya, and South Africa—home to two-thirds of cross-border payment-related fintech firms—have managed to nurture advancements without compromising their financial systems, according to the paper.
Empower the traditional banking system. Fintech products often complement conventional bank services, so encouraging collaboration and innovation in banking can boost startups in the sector.
Build more digital infrastructure. Countries underserved by traditional payment platforms have the most to gain from technological upgrades.
Encourage new entrants. More ideas are better, so regulators should prevent anti-competitive practices and policies.
‘Optimistic about the future’
Economic gains could be potent for African nations, which have endured cuts in US aid and increased tariffs on lucrative export products. Iyoha said she’s confident that African countries with large numbers of digital workers, such as Nigeria, Kenya and South Africa, can withstand such shocks—if they can further develop their financial-payment systems.
“I’m quite optimistic about the future,” says Iyoha, citing the recent announcement that Flutterwave gained approval to operate as a microlender in Nigeria, enabling it to compete with banks. “Africa has the potential for an incredible spike in its telemigration sector.”
That’s good news for not only remote workers in Africa, but for global companies hoping to tap into Africa’s huge and growing digital talent pool.
“It opens up opportunities for everyone,” Iyoha says.
Disclosure: Ebehi Iyoha does not hold a financial stake or provide advice to Gigbanc.
Illustration by Ariana Cohen-Halberstam with images from Adobe Stock.
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The Role of African Fintechs in Facilitating Telemigration
Iyoha, Ebehi, Omolola Amoussou, and Paul Okundaye. “The Role of African Fintechs in Facilitating Telemigration.” Chapter 8 in African Businesses and Multiple Value Creation: Impact through Technology and Digitalization, edited by Emiel L. Eijdenberg, Nsubili M. Isaga, Leonard J. Paas, Progress Choongo, Enno Masurel, and Shiferaw Muleta. World Scientific, 2026. Forthcoming.
