The African banking sector is facing challenges accessing international financial markets, as some global banks have left the continent due to strict regulatory requirements. Many African banks struggle to establish reliable correspondent banking relationships to facilitate their international transactions, particularly for trade financing and related services. This has hindered the growth prospects of the countries where these banks operate, and limited their participation in the global financial services ecosystem. The importance of financial inclusion cannot be overstated, especially in the context of achieving the United Nations Sustainable Development Goals (SDGs). Without it, goals such as eradicating poverty, ending hunger, promoting health, achieving gender equality, fostering economic growth and jobs, supporting industry, innovation and infrastructure and reducing inequality remain unattainable.</p> Compliance concerns are one factor impacting correspondent banking services and credit lines for African banks, but there are economic considerations too, such as the increasing cost of meeting regulatory requirements. Rising costs have made providing such services unprofitable for banks in developing economies, including Africa. As a result, the continent faces high trade finance costs, further complicating its economic landscape.</p> There’s a renewed push to promote trade within Africa. Currently, the level of trade within Africa is around 16%, much lower than other regions globally. The establishment of the African Continental Free Trade Area (AfCFTA) aims to boost trade within Africa by removing barriers and creating a single market for goods and services. Increasing trade among African countries will help mitigate the impact of global banks de-risking. The heavy reliance on trade with regions outside Africa leads to dependence on non-African currencies and financial systems. The introduction of the Pan-African Payments and Settlements System (PAPSS) will allow trade to be settled in local African currencies, reducing the reliance on non-African currencies and softening the impact of de-risking. This is an important step in revolutionising cross-border payments and simplifying trade and payments within Africa.</p> The capacity of African financial institutions needs to be enhanced to address the impact of derisking. More compliance education and training is required for bankers and financial services providers. Afreximbank is collaborating with the Bankers Association for Finance and Trade (BAFT) on this, conducting respondent bank playbook training across multiple banks in various countries and languages. The Afreximbank annual compliance forum also plays a crucial role in building capacity. Additionally, the regional bodies of the Financial Action Task Force (FATF) in Africa are working to implement FATF framework in specific regions to help ensure compliance with anti-money laundering and counter-terrorist measures (AML/CFT).</p> In regions where the volume of transactions is so low it doesn't make business sense for correspondent banks to provide services, innovative solutions are required. Regional transaction aggregators need to be empowered to aggregate lower volume requests, creating critical mass to make processing requests profitable for correspondent banks outside the continent. The capability ISO 20022 brings ensures full payment transparency for this aggregation, and ensures no data on the payment is missing for any parties in the payment chain. The Afreximbank Trade Payments Services (AfPAY) is designed to tackle this issue.</p> The G20's call to action on cross-border payments, with a focus on improving accessibility, is not just a regional or continental concern but a global one. It highlights the need for creative solutions to ensure payment services are accessible to people in underserved regions worldwide. Africa, in particular, requires support to become integrated into the financial services ecosystem. This is crucial for Africa's economic development and the global financial landscape.</p>