Latest news with #Verto
Zawya
28-05-2025
- Business
- Zawya
South Africa: Inside Verto's strategy to streamline African trade with a 2030 vision
Cornelius Coetzee, country director for Verto South Africa, shares insights on the company's strategic expansion across Africa, its role in simplifying global B2B payments, and how its licensing and infrastructure empower businesses to scale. In this Q&A, Coetzee unpacks how Verto is shaping the future of cross-border trade on the continent. Could you speak to Verto's footprint in 49 countries including South Africa and Africa, and how you see Verto expanding to meet the B2B needs on the African continent by 2030? Verto's footprint provides access to 49 currencies globally, leveraged through our strategic licenses in the UK and US which enable crucial banking partnerships. For Africa specifically, our focus was to obtain licensing and set up a market presence in key economic hubs: Nigeria, Kenya, and South Africa, with the UAE serving as a vital link for Middle Eastern and North African (MENA) region trade. This existing infrastructure uniquely positions us to manage local cash pools, and the volatility often associated with African currencies - a complex area many global banks avoid. Looking towards 2030, Verto's African expansion strategy is to broaden our direct licensing across the continent. This will further empower us to meet growing B2B needs by enhancing payment infrastructure, significantly fostering both intra-African trade and streamlining Africa's trade flows with the rest of the world. Verto's business model emphasises B2B transactions, offering a platform for multinational corporations to transact seamlessly with suppliers and business ecosystems across continents and currencies — including US dollar-based conversions and real-time payments. Can you elaborate on how this formula works in practice? Verto's formula helps B2B clients navigate evolving global trade, offering flexibility beyond sole USD reliance to transact seamlessly in diverse, even 'exotic', currencies. Our approach integrates a unified platform providing multi-currency accounts (e.g., NGN, KES, ZAR alongside G10), expert FX and liquidity management to handle African currency volatility and convertibility, efficient payment rails enabling near real-time cross-border transactions, and strategic licensing with banking partnerships for compliant global liquidity. This empowers multinationals to transact with their ecosystems in local currencies or USD, simplifying complex cross-border payments. You mentioned two members of Verto's founding team — one a former banker and the other a fintech aficionado — have addressed the challenges faced by companies exporting to multiple countries. One such challenge is the licensing hurdles in regions like the UK and EU, which can delay imports and result in significant holding costs, sometimes amounting to millions. Could you speak more to that? Verto's co-founders, both bringing experience from the technology and remittances sides of banking, understood that robust compliance is paramount, an insight solidified by Verto's foundational experience trading between the UK and the highly illiquid Nigerian market. Their formula for navigating complex licensing hurdles involves proactively cementing relationships with central banks and regulators. Crucially, they engage these institutions by understanding their primary role as policymakers dedicated to their country's treasury stability, rather than as commercial bankers. This deep regulatory understanding and collaborative, policy-first approach are key to Verto's ability to obtain licensing efficiently, thereby helping businesses mitigate costly delays when exporting to multiple countries. For B2B companies looking to partner with Verto, could you explain how your platform helps solve this issue? For example, how does Verto act as a go-between license holder or sponsor for clients needing import/export licensing approval — and how does this enable companies to scale their operations more efficiently? For B2B companies looking to partner with Verto, we solve our clients' pain points by acting as a licensed intermediary, leveraging our regulatory approvals in key jurisdictions. This means we can operate on behalf of clients; for instance, a South African exporter wishing to trade into the EU or UK can utilise our FCA license in the UK to access local GBP or Euro IBANs, without the client needing their own entity registered in that corridor. Essentially, they can receive funds like a local and repatriate that back to South Africa more efficiently. By Verto serving as this licensed intermediary, companies significantly reduce the typical costs, risks, and administrative delays associated with individual licensing processes. This streamlined market access is crucial, enabling businesses to scale their international operations much more efficiently. So far Trump's tariffs have highlighted how expenses such as currency conversions, import taxes, and sudden currency fluctuations have become critical — even lifeblood — costs for importers and exporters. Could you explain how Verto's platform helps mitigate these expenses and addresses this challenge? Businesses have long grappled with substantial 'costs of doing business' internationally, such as high transaction margins, various fees including SWIFT charges, frustrating payment delays, and significant currency risk exposure. These are no longer just accepted overheads, but critical pain points that Verto directly addresses. We help clients mitigate these financial risks and inefficiencies on two primary fronts: Optimising currency risk and transaction costs: Verto leverages strong partnerships with multiple banking partners globally. This network allows us to streamline the entire payment process, offering more competitive foreign-exchange rates and by default, reducing our clients' exposure to volatile currency fluctuations. Accelerating settlement times and reducing complexity: Our well-developed financial ecosystem and banking relationships enable us to drastically cut down transaction settlement periods. Instead of businesses waiting three to five days and navigating complex regulatory hurdles, Verto ensures funds are typically delivered within 24 hours, often even sooner. Could you elaborate on your plans to expand your South African retail footprint—for instance, by partnering with businesses that follow models like Shein or Takealot? How does this tie in with your interest in scaling up your wine import/export operations? Recognising that the third-party payment processing (TPPP) market in South Africa is currently too expensive, Verto aims to extend the cost-reduction and efficiency benefits we've delivered to our global B2B customers to the domestic retail and wholesale sectors. Our strategy involves leveraging Verto's existing, proven global system - which provides fast, near-instant settlements for merchants - and adapting it to create a robust solution for local collections, payment aggregation, and domestic settlement. Crucially, many South African retail and wholesale businesses also conduct high-volume monthly imports from regions like the Far East, the Middle East, or the US. By integrating Verto's capabilities, these companies can not only streamline their domestic payment processes but also simultaneously fast-track settlement lead times and reduce their foreign-exchange risk exposure on their import trade activities. This offers them a powerful, integrated solution to enhance overall operational and financial efficiency. You mentioned that you've recently launched operations in Dubai and would ideally like to expand into Egypt. What opportunities might such an expansion present for Verto? Establishing the UAE as a strategic hub is pivotal for Verto, granting us licensed access to the burgeoning Middle Eastern and North African (MENA) trading block, markets of increasing global prominence previously less accessible to us. Our UAE license is the key to effectively serving businesses operating in and with this dynamic region. Many international businesses are now centralising their operations in the UAE, which also boasts strong trade agreements with key players in the GCC and fosters growing connectivity with other regions. Verto is strategically positioned to leverage this. Our UAE license will enable us to 'connect the dots', fostering seamless trade and payment corridors not only within MENA itself but also crucially bridging MENA with African markets and the wider global economy. This significantly expands our ability to support our clients' international trading and growth ambitions. Given the pressure that the Trump administration and rising tariffs are placing on businesses and their profit margins, what advice would you offer to multinational corporations feeling the squeeze? How might partnering with Verto help turn these challenges into opportunities? We understand that multinational corporations, especially those in South Africa, often have deeply rooted, traditional banking relationships and might be cautious about engaging a fintech partner. Verto respects this loyalty; we don't aim to replace your primary bank. Instead, we position ourselves as a specialised, complementary solution designed to optimise the global trade arm of your business. In today's uncertain economic landscape, the critical question for many MNCs is how to best improve international operational costs and strengthen their financial position. Verto provides a direct answer. Our core mission is to reduce these cross-border transaction costs and significantly accelerate global trade. We achieve this by ensuring greater currency availability across numerous corridors and delivering tangible cost savings, allowing your business to focus more on strategic growth and scaling opportunities. By partnering with Verto, you are assured of a measurable reduction in your international cost of doing business. Furthermore, you gain access to a streamlined, interconnected platform that facilitates trade across multiple corridors, some of which may have been previously challenging or less cost-effective to reach. All rights reserved. © 2022. Provided by SyndiGate Media Inc. (
IOL News
27-05-2025
- Business
- IOL News
The wobbly table problem: can Stablecoins fix global payments?
But the question for me isn't whether stablecoins will disrupt his cross-border payments orchestration business model—it's whether that disruption will prove liberating or merely transfer control to new gatekeepers, says the author. Image: flickr We've all been there. You're at a great restaurant, the food is exceptional, the company is sublime, but the table wobbles incessantly. Every time you reach for your drink, it rocks. Every bite of food becomes an exercise in careful coordination. The solution is simple—slide a matchbook under the short leg—but somehow no one ever does it. Instead, we spend the entire evening managing around the dysfunction, accepting the irritation as part of the experience. Video Player is loading. Play Video Play Unmute Current Time 0:00 / Duration -:- Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan Transparency Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. Advertisement Next Stay Close ✕ The global financial system suffers from the same wobbly table problem, only instead of disrupting dinner, it's costing African businesses billions and perpetuating economic exclusion on an industrial scale. The matchbook solution might finally be at hand, in the form of stablecoins. But the questions surrounding this fix demand careful scrutiny. $286 billion blind spot The $286 billion (R5.1 trillion) trade corridor between Africa and China represents an enormous market served by infrastructure that treats African businesses as an afterthought. Ola Oyetayo, Nigerian co-founder and CEO of Verto, revealed during a recent African Tech Roundup Podcast conversation that 96-97% of business cross-border payments still flow through traditional banks. It's a statistic that exposes the profound resistance built into global finance. 'Traditional banks have no incentive to fix this,' Oyetayo observed. 'The current system works perfectly well for developed markets. Why would they engineer solutions for markets they've systematically excluded?' This exclusion isn't accidental; it's architectural. Correspondent banking relationships, designed when emerging markets were peripheral to global trade, remain stubbornly unchanged despite those markets' growing centrality to the future of global trade. Banks close on weekends. Settlement periods stretch interminably. Capital controls create regulatory mazes. Since coming out of Y Combinator (YC) in 2019, Verto has grown into what Oyetayo calls a profitable, cashflow-positive fintech company playing across several African markets. The firm recently made waves after bagging the prestigious USD 1 million Milken-Motsepe Prize in FinTech. When asked what prepared him for cross-border payments work, Oyetayo's response was revealing: 'The honest answer is none of those [previous finance] roles. Sometimes the people that end up solving bigger problems are folks that literally fall into it very naively.' Perhaps naivety is required because anyone who truly understands the system recognises that the dysfunction serves specific interests. Deliberate dysfunction The system isn't broken, it's working as intended. Financial institutions operate through closed networks of trust, brand, and credibility built over time. This isn't about competence; it's about control and access. Controlled access. The traditional financial system creates a privilege paradox: markets needing alternative payment solutions most have the least access to infrastructure that makes adoption seamless, while markets with seamless traditional finance have little incentive to adopt alternatives. Walking through the City of London, where Oyetayo built his institutional finance career, you realise how small that world actually is. Yet this small bubble controls trillions in global flows. The exclusion of African businesses from efficient cross-border payments isn't a bug—it's a feature preserving existing power structures whilst extracting maximum fees from those with the fewest alternatives. Enter stablecoins—with strings attached This is where stablecoins become seductive, though not necessarily liberating. Opera's MiniPay has attracted over 7 million wallets across 50+ countries, enabling dollar transfers for less than USD 0.01 in under two seconds. For comparison, traditional remittances in Africa can cost up to 20% of transaction value. Fintech leaders have praised stablecoins for their potential in addressing cross-border payment challenges the world over. However, Oyetayo offers a contrarian insight: 'Stablecoins solve liquidity, volatility, and capital control challenges that banks simply ignore, but there's no case for them in developed markets. People talk about disrupting Visa and MasterCard—I don't see that coming anytime soon.' Stablecoins don't appear to challenge the fundamental architecture of global finance. They do, however, make it more efficient while concentrating control. They address pain points without necessarily tackling power structures, solving immediate problems while potentially creating longer-term dependencies. Mar-a-Lago whispers Behind closed doors, more ambitious theories circulate. The rumoured Mar-a-Lago Accord—described as the strategic foundation of Trump's tariff-led trade policy—could theoretically involve stablecoins to maintain US dollar dominance through a proposed sovereign wealth fund. This theory suggests widespread stablecoin adoption could enable a coordinated global reset, allowing heavily indebted nations to restructure obligations while preserving the dollar's reserve currency status. Foreign holdings of US Treasuries could be converted into long-term bonds, easing fiscal pressures while stablecoins handle commerce flows. Such speculation remains unverified, with no concrete evidence of such coordination. The surveillance premium Stablecoins' efficiency comes with a surveillance premium. In a digital economy where every transaction can be monitored, we're courting scenarios that erode financial privacy and personal freedoms. Traditional cash transactions, for all their inefficiencies, preserve anonymity. Stablecoins enable platforms and governments to map economic relationships and scrutinise financial decisions comprehensively. MiniPay's user-friendly interface, with onboarding via Google or iCloud accounts, simplifies access but raises privacy concerns. The service is built on Celo, a public blockchain where transactions are fully trackable and transparent. While non-custodial, the setup could still enable transaction tracking, creating a potential panopticon where every economic move is visible. Innovator's dilemma Meanwhile, for cross-border payments fintech businesses like Verto, stablecoins represent a Faustian bargain. Their business model navigates the wobbly table of traditional finance, but the stablecoin 'solution' replaces it with one owned by different interests. Oyetayo, an early advocate for stablecoins, remains optimistic. But the question for me isn't whether stablecoins will disrupt his cross-border payments orchestration business model—it's whether that disruption will prove liberating or merely transfer control to new gatekeepers. Opera's MiniPay, by abstracting crypto complexity and focusing on usability, creates a parallel financial system that bypasses traditional infrastructure while fostering dependencies on Silicon Valley platforms and American monetary policy. Price of efficiency What are we willing to sacrifice for stability? Stablecoins might democratise access to global finance, enabling African businesses to participate in international trade without traditional gatekeepers. But they also create sophisticated dependencies, tying emerging markets to dollar-denominated systems controlled by American interests. Both narratives may hold true: stablecoins could solve immediate pain points for African businesses while reinforcing structural dependencies. They might reduce transaction costs while increasing surveillance and control. They might enable financial inclusion while facilitating new forms of exclusion. The matchbook solution is here, promising to stop the table from wobbling. But when we slide it underneath, we might discover we've traded one dysfunction for another—this time, with monitoring capabilities built into every transaction. As African businesses navigate expensive, slow, and unreliable cross-border payments, the promise of sub-cent transfers in under two seconds proves irresistible. But in our rush to fix the wobbly table, we should ask who's designing the replacement—and what they plan to do with all the data it will inevitably collect. Andile Masuku is Co-founder and Executive Producer at African Tech Roundup. Connect and engage with Andile on X (@MasukuAndile) and via LinkedIn. Andile Masuku is Co-founder and Executive Producer at African Tech Roundup. Image: Supplied BUSINESS REPORT Visit:
Zawya
08-05-2025
- Business
- Zawya
Milken Institute and Motsepe Foundation Announce Winner of the Milken-Motsepe Prize in Fintech and Launch New Prize
The Milken Institute ( and the Motsepe Foundation are proud to announce the winner of the Milken-Motsepe Prize in FinTech, a $2 million innovation award designed to reward companies working to expand access to capital and financial services for small businesses in emerging and frontier markets. The winner was announced at the Milken Institute Global Conference in Los Angeles. Verto ( based in the United Kingdom, won the $1 million Grand Prize for its business-to-business cross-border payments platform, which enables businesses in emerging markets to send and receive payments, eliminating intermediary fees, supporting 49 currencies, and settling transactions quickly. FinTech is the third prize awarded as part of the Milken–Motsepe Innovation Prize Program, a series of competitive multimillion-dollar global competitions and awards designed to incentivize and reward bold, innovative solutions to address pressing economic and environmental challenges in Africa. A Rigorous Award Cycle: From Application to Award Launched in May 2024, the Milken-Motsepe Prize in FinTech attracted more than 3,000 entrepreneurs from 126 countries across six continents. A total of 400 teams applied, with just 10 being selected as semifinalists. Each team underwent a comprehensive judging process that evaluated five key criteria: affordability and accessibility, ethical and responsible practices, scalability in other markets, the use of cutting-edge technology, and the potential to promote equitable access to financial services. In December 2024, 10 semifinalists pitched their innovations to investors at the Milken Institute Middle East and Africa Summit in Abu Dhabi. From this group, an expert panel of judges selected three finalists—Chumz, Oze, and Verto—to advance to the final stage of the innovation award at the 2025 Milken Institute Global Conference. 'Across the African continent, technology and innovation are disrupting traditional finance and banking approaches. Investment in this space is profitable and, more importantly, necessary for financial inclusion," said Dr. Precious Moloi-Motsepe, co-founder and CEO of the Motsepe Foundation. "My heartfelt congratulations to the winners and all the finalists for demonstrating feasible and impactful solutions that will drive economic activity and shared prosperity in the global South, while influencing the financial sector all over the world." Since its launch in 2021, the Milken-Motsepe Innovation Prize Program has awarded over $6 million in funding to more than 50 innovators worldwide. Participating teams have raised nearly 10 times the Grand Prize in additional outside investments, reaching and impacting over 530,000 community members. The Milken-Motsepe Innovation Prize Program offers free, curated resources and online events not only to award winners but also to nearly 9,000 global entrepreneurs. New Prize in AI and Manufacturing The fourth Milken-Motsepe Innovation Prize, which focuses on AI and manufacturing, launched at the 2025 Milken Institute Global Conference. The new $2 million award is designed to recognize established companies driving innovation in Africa's manufacturing sector. Focused on advanced data analytics and artificial intelligence, the prize rewards technological breakthroughs that create long-term economic resilience in the supply chain in Africa. Registration is open until July 31, 2025. With $2 million in total prizes, including a $1 million Grand Prize, 'AI and Manufacturing' seeks companies that accelerate technological advancements, create jobs, and improve access to essential goods and services for communities across Africa. The award represents an opportunity to support companies leading the next wave of transformative change in manufacturing. 'We have witnessed our prize programs bring forward some of the most visionary thinkers across sectors, from agriculture to financial technology. Now we're excited to see what bold entrepreneurs are doing for the manufacturing sector to harness the power of AI and other advanced technologies to improve the supply chain in Africa,' said Emily Musil, PhD, managing director of environmental and social innovation at the Milken Institute. 'Prizes like this have the power to reveal new and better ways to operate in the digital age and shape how we can do better for people and the planet in the new future we are building.' For more information about the winners and the Milken-Motsepe Innovation Prize Program, visit Distributed by APO Group on behalf of The Milken-Motsepe Innovation Prize Program. Contact: Paul Guequierre Email: pguequierre@ Phone: 202-249-6942 ABOUT THE MILKEN INSTITUTE: The Milken Institute is a nonprofit, nonpartisan think tank focused on accelerating measurable progress on the path to a meaningful life. With a focus on financial, physical, mental, and environmental health, we bring together the best ideas and innovative resourcing to develop blueprints for tackling some of our most critical global issues through the lens of what's pressing now and what's coming next. For more information, visit ABOUT THE MOTSEPE FOUNDATION: The Motsepe Foundation was founded in 1999 by Dr. Patrice Motsepe and his wife, Dr. Precious Moloi-Motsepe. The goal of the Motsepe Foundation is to contribute toward eradicating poverty and to sustainably improve the living conditions and standards of living of poor, unemployed, and marginalized people in South Africa, Africa, and the world. In January 2013, Dr. Motsepe and Dr. Moloi-Motsepe joined the Giving Pledge, which was started by Warren Buffett and Bill and Melinda Gates. Dr. Motsepe and his wife committed to give half of their wealth to the poor and for philanthropic purposes during their lifetime and beyond.
Business Wire
07-05-2025
- Business
- Business Wire
Milken Institute and Motsepe Foundation Announce Winner of the Milken-Motsepe Prize in FinTech and Launch New Prize
LOS ANGELES & JOHANNESBURG--(BUSINESS WIRE)--The Milken Institute and the Motsepe Foundation are proud to announce the winner of the Milken-Motsepe Prize in FinTech, a $2 million innovation award designed to reward companies working to expand access to capital and financial services for small businesses in emerging and frontier markets. The winner was announced at the Milken Institute Global Conference in Los Angeles. Verto, based in the United Kingdom, won the $1 million Grand Prize for its business-to-business cross-border payments platform, which enables businesses in emerging markets to send and receive payments, eliminating intermediary fees, supporting 49 currencies, and settling transactions quickly. FinTech is the third prize awarded as part of the Milken–Motsepe Innovation Prize Program, a series of competitive multimillion-dollar global competitions and awards designed to incentivize and reward bold, innovative solutions to address pressing economic and environmental challenges in Africa. A Rigorous Award Cycle: From Application to Award Launched in May 2024, the Milken-Motsepe Prize in FinTech attracted more than 3,000 entrepreneurs from 126 countries across six continents. A total of 400 teams applied, with just 10 being selected as semifinalists. Each team underwent a comprehensive judging process that evaluated five key criteria: affordability and accessibility, ethical and responsible practices, scalability in other markets, the use of cutting-edge technology, and the potential to promote equitable access to financial services. In December 2024, 10 semifinalists pitched their innovations to investors at the Milken Institute Middle East and Africa Summit in Abu Dhabi. From this group, an expert panel of judges selected three finalists—Chumz, Oze, and Verto—to advance to the final stage of the innovation award at the 2025 Milken Institute Global Conference. 'Across the African continent, technology and innovation are disrupting traditional finance and banking approaches. Investment in this space is profitable and, more importantly, necessary for financial inclusion," said Dr. Precious Moloi-Motsepe, co-founder and CEO of the Motsepe Foundation. "My heartfelt congratulations to the winners and all the finalists for demonstrating feasible and impactful solutions that will drive economic activity and shared prosperity in the global South, while influencing the financial sector all over the world." Since its launch in 2021, the Milken-Motsepe Innovation Prize Program has awarded over $6 million in funding to more than 50 innovators worldwide. Participating teams have raised nearly 10 times the Grand Prize in additional outside investments, reaching and impacting over 530,000 community members. The Milken-Motsepe Innovation Prize Program offers free, curated resources and online events not only to award winners but also to nearly 9,000 global entrepreneurs. New Prize in AI and Manufacturing The fourth Milken-Motsepe Innovation Prize, which focuses on AI and manufacturing, launched at the 2025 Milken Institute Global Conference. The new $2 million award is designed to recognize established companies driving innovation in Africa's manufacturing sector. Focused on advanced data analytics and artificial intelligence, the prize rewards technological breakthroughs that create long-term economic resilience in the supply chain in Africa. Registration is open until July 31, 2025. With $2 million in total prizes, including a $1 million Grand Prize, 'AI and Manufacturing' seeks companies that accelerate technological advancements, create jobs, and improve access to essential goods and services for communities across Africa. The award represents an opportunity to support companies leading the next wave of transformative change in manufacturing. 'We have witnessed our prize programs bring forward some of the most visionary thinkers across sectors, from agriculture to financial technology. Now we're excited to see what bold entrepreneurs are doing for the manufacturing sector to harness the power of AI and other advanced technologies to improve the supply chain in Africa,' said Emily Musil, PhD, managing director of environmental and social innovation at the Milken Institute. 'Prizes like this have the power to reveal new and better ways to operate in the digital age and shape how we can do better for people and the planet in the new future we are building.' For more information about the winners and the Milken-Motsepe Innovation Prize Program, visit ABOUT THE MILKEN INSTITUTE The Milken Institute is a nonprofit, nonpartisan think tank focused on accelerating measurable progress on the path to a meaningful life. With a focus on financial, physical, mental, and environmental health, we bring together the best ideas and innovative resourcing to develop blueprints for tackling some of our most critical global issues through the lens of what's pressing now and what's coming next. For more information, visit ABOUT THE MOTSEPE FOUNDATION The Motsepe Foundation was founded in 1999 by Dr. Patrice Motsepe and his wife, Dr. Precious Moloi-Motsepe. The goal of the Motsepe Foundation is to contribute toward eradicating poverty and to sustainably improve the living conditions and standards of living of poor, unemployed, and marginalized people in South Africa, Africa, and the world. In January 2013, Dr. Motsepe and Dr. Moloi-Motsepe joined the Giving Pledge, which was started by Warren Buffett and Bill and Melinda Gates. Dr. Motsepe and his wife committed to give half of their wealth to the poor and for philanthropic purposes during their lifetime and beyond. For more information, visit
IOL News
27-04-2025
- Business
- IOL News
Tariff wars pose new challenges for Africa's cross-border payments and economic growth
The administration of US President Donald Trump has cited Beijing's retaliation to previous levies as the reason for the latest potential hike. As the ongoing global trade war escalates, experts are increasingly concerned about its ramifications for cross-border payments, particularly in Africa. Cornelius Coetzee, Country Manager for Verto South Africa, sheds light on the current economic landscape, revealing that the turbulence is deeply rooted in the United States' efforts to foster a stronger domestic market under the Trump administration. While tariffs have been paused for the time being, the implications for the South African economy and its critical relationship with the United States, could be significant. 'The rationale behind the trade war is an attempt to build a self-sustaining U.S. economy, yet statistics indicate that the U.S. remains reliant on global partnerships for two-thirds of its economic output. Trump's attempts to cut aid and reduce government spending were aimed at domestic recovery, but the retaliatory tariffs from other nations have put everyone on edge,' Coetzee said. For South Africa, an economically fragile nation with a heavy reliance on trade partnerships, the stakes are high. The current tariff crisis presents a double-edged sword; a pause might offer temporary relief, yet uncertainty about future negotiations leaves the country in a precarious position. A robust relationship with the US, a nation known for its appetite for foreign products, remains essential for South African growth. Coetzee added, 'If you are developing as a nation, establishing a strong trade relationship with the U.S. is crucial. However, the risk of the rand depreciating significantly, beyond R20 to $1, could lead to a dire economic fallout. The scenarios are forcing South African manufacturers to reconsider their dependence on U.S. ties, especially given the potential for a technical recession.' Meanwhile, the broader implications for cross-border payments are becoming apparent. The tariffs, particularly the steep 125% tariff on Chinese imports, will indirectly affect South African companies and their capacity to engage in international trade. Coetzee said that this creates a reluctance to trade due to potential losses, affecting the wider economic landscape. As the clock ticks down on the 90-day tariff pause, Coetzee warned that South Africa must ensure its negotiation team comprises diverse business leaders. These representatives should cover various sectors to secure advantageous outcomes. 'We need our delegation to predominantly reflect our economy's multifaceted structure, and that's crucial for minimising exposure to tariffs,' he said. Cross-border payments Furthermore, with the South African Reserve Bank (SARB) slated to introduce new regulations to enhance the cross-border payments sector in June, Coetzee said he remains optimistic. 'While regulation can impose additional hurdles for fintech companies, it provides an opportunity to increase the strength of the rand and enhance business confidence. We must leverage these regulations to show global markets that South Africa is stable and ready for business,' he said. 'It's crucial for South Africa—and Africa as a whole—to look inward and foster stronger trade relationships within the continent. This will not only make cross-border payments more effortless but also reduce reliance on U.S. dollar-denominated transactions,' Coetzee further added. With initiatives aimed at streamlining cross-border payments through partnerships and regulatory reforms, Coetzee said that Africa has the power to mitigate risks and enhance economic stability. These strategies hinge on creating an efficient and open trading environment while strictly adhering to compliance and safeguarding measures against illicit activities. BUSINESS REPORT
