Settlement Corridors
African FX doesn't work like global markets assume. Direct currency pairs rarely exist. Money routes through intermediaries, each hop adding cost, time, and rate uncertainty.
Understanding these corridors is essential for anyone building payment or financial infrastructure in Africa.
How African Corridors Actually Work
No Direct Markets
Most African currency pairs have no direct interbank market. You can't simply buy NGN with KES—there's no liquid market for that pair.
USD/EUR Routing
Settlement routes through hard currencies—typically USD in London, Dubai, or New York. Each hop involves a conversion, spread, and delay.
Rate Compounding
The effective rate isn't one conversion—it's the product of 2-3 conversions, each with its own spread. This is where pricing breaks.
Example: KES → NGN Settlement
Each conversion involves a bid-ask spread, typically 0.5-2% per leg. Total cost: 1-4%+ depending on amount and urgency.
Major African Corridors
The East-West backbone of African trade. Direct KES/NGN liquidity is thin; most settlement routes through USD in Dubai or London.
- •No direct interbank market
- •Multiple intermediary banks required
- •Settlement can take 2-5 days
- •Rate opacity at each hop
Continental commerce corridor connecting Africa's two largest economies. Trade flows significant but FX infrastructure fragmented.
- •ZAR volatility impacts corridor rates
- •NGN multiple rate regimes
- •Documentary requirements differ
- •Correspondent banking limited
EAC regional corridor with growing direct liquidity. Cross-border mobile money increasingly relevant.
- •Direct market liquidity limited
- •Mobile money rates can diverge from bank rates
- •Cross-border regulatory complexity
- •Settlement time varies by channel
Francophone-Anglophone bridge. CFA's EUR peg creates predictability on one side; NGN's volatility on the other.
- •EUR intermediate step required
- •CFA convertibility restrictions
- •Informal market significant
- •Trade documentation complex
Major EAC trade route. Border towns have active informal markets; formal banking channels growing.
- •Informal market rate divergence
- •Cross-border trade settlement complexity
- •Mobile money interoperability limited
- •Documentary trade requirements
North-West corridor connecting Africa's second and third largest economies. Limited direct liquidity.
- •EGP multiple rate history
- •Capital controls both sides
- •No direct correspondent relationships
- •USD routing adds cost and time
Why Corridor Understanding Matters
Generic FX data providers report single rates for currency pairs. But in Africa, the "rate" is meaningless without understanding the settlement path.
A KES/NGN rate from a global provider might reflect interbank mid-rates that no one can actually trade at. The real rate—the one you settle at—depends on your routing, your volume, and your counterparty relationships.
AFXO is built with this corridor reality at its core. We don't just report rates—we understand the settlement paths they represent.
Building on African Corridors?
Access corridor-aware FX data through our APIs. Technical documentation and integration guides available on afxo.ai.