Lagos Built a Clearing House. West Africa Is Still Waiting to Use It

Nigeria's interbank settlement system clears more transactions in a single day than several West African economies process in a month. The infrastructure is real, it is domestic, and it works. What it does not do is cross a border. A fabric wholesaler moving goods between Lagos and Cotonou described the arithmetic plainly: a domestic transfer settles in seconds and costs almost nothing; the same value moving 120 kilometres west takes three days, passes through a correspondent bank in Europe, and loses between four and seven per cent on the way. ## The correspondent problem The detour is not a technical failure. It is a legal one. Two banks in neighbouring countries, both solvent and both regulated, often have no direct relationship. Settlement is routed through an institution in London or Paris that holds accounts for each — and prices the privilege. Regional efforts to bypass that routing have existed on paper for years. The obstacle has never been the ledger. It is that a payment crossing a border becomes a question of two central banks, two compliance regimes, and two currencies whose relative value neither government wants to fix in public. ## What the numbers do not show Official trade figures for the corridor understate actual volume, because a large share of it never touches a bank. Cash crosses in vehicles. Value moves through informal networks that clear faster than the formal system and charge less than the correspondent route. That informal layer is not a symptom of underdevelopment. It is a rational response to a formal system that is slower and more expensive for the specific thing its users need it to do. ## The question for the next decade Nigeria's domestic rails are a genuine achievement, and they are increasingly a template. Whether they become regional depends less on engineering than on whether governments are willing to let a payment leave the country without passing through a system they can individually control. That is a political question. It has been asked before, and it has not yet been answered.