Africa is rising. But so are its hidden business costs.
As companies across the continent go global—whether it’s a Nigerian fashion brand importing fabric, a Kenyan startup paying for digital tools, or a Ghanaian trader buying medical devices—foreign exchange (FX) becomes part of everyday operations.
But here’s the hard truth: most African businesses are losing significant profits to FX fees without realizing it.
Whether it's inflated exchange rates, lack of transparency, or complex regulatory hurdles, these hidden costs are quietly bleeding businesses dry. And in many cases, the losses run into tens of thousands of dollars per year.
What Are FX Fees–and Why Should African Businesses Care?
FX fees are the charges businesses incur when converting one currency to another. They typically come in two forms:
Exchange rate markups: When banks or payment platforms offer a rate that’s less favorable than the real mid-market rate (also known as the interbank rate).
Service or transaction fees: Flat or percentage-based charges added on top of the conversion.
These fees are often buried in fine print or hidden in "bad" exchange rates, making them easy to overlook.
Why African Businesses Lose More to FX Fees
Foreign exchange challenges affect businesses around the world, but African businesses face a unique set of hurdles that make the impact more severe, more frequent, and more difficult to navigate.
Here’s 4 reasons African companies are losing big to FX charges:
1. Lack of Transparency in Financial Systems
Many traditional banks and money transfer services across the continent don’t disclose how much they charge for currency exchange.
Instead of clearly stating “We’re charging you a 4% FX fee,” they embed the charge into a worse exchange rate. The business owner sees a conversion, but not the hidden fee, which makes it impossible to calculate or compare costs.
This creates a pricing blind spot. Most African entrepreneurs only realise the losses when doing a year-end financial audit, by which time it’s too late.
2. Dependency on Foreign Services
African businesses are increasingly global in how they operate. A tech startup in Nairobi may rely on:
Google Workspace (USD)
AWS Cloud (USD)
Stripe or PayPal for payments (USD or EUR)
Remote talent platforms (USD, GBP)
Likewise, a trader in Lagos might pay suppliers in China, Turkey, or the UK. All these payments require currency exchange, and multiple conversions quickly stack up hidden fees.
The more global your tools, the higher the exposure.
3. Complex Regulatory and FX Control Environments
Many African countries have strict foreign exchange controls. In Nigeria, for instance, limited access to USD through the central bank has led many businesses to use black-market alternatives, often at a 20–40% premium over the official rate.
In Zimbabwe, inconsistent supply of USD and high inflation force businesses into multiple currency gymnastics just to stay operational.
The result? Businesses end up paying more to move money, delaying payments, or losing credibility with international partners.
4. Costly and Fragmented Cross-Border Infrastructure
Unlike Europe or North America, cross-border payments within Africa, or from Africa to the rest of the world, don’t happen in a straight line. They usually pass through:
Multiple intermediary banks
Different jurisdictions
Varying regulations
Each stop adds fees, slows transactions, and increases the chances of slippage or error. For small and medium-sized enterprises (SMEs), these costs can be the difference between profit and loss.
How to Protect Your Business from FX Losses
Foreign exchange costs are a business risk, but they can be managed or even eliminated with the right tools.
Here’s how to take back control:
1. Use Transparent Fintech Platforms
Many modern fintechs now offer multi-currency accounts and real-time FX tools. These platforms give you the mid-market rate, charge minimal fees, and show your exchange breakdown clearly.
Let’s break down the top players:
Leatherback (Best for African Businesses)
Leatherback was built specifically for African businesses that operate globally. It offers:
Multi-currency business wallets (USD, GBP, EUR, NGN, etc.)
Competitive, transparent FX rates—no hidden markups
Easy global transfers to 15+ countries
In-country settlement in major markets (UK, US, Nigeria, and more)
Local bank account details in foreign currencies
With Leatherback, African entrepreneurs can hold money in foreign currencies, convert when it’s favourable, and send globally, without FX headaches.
→ Learn more about Leatherback’s business solutions
Wise Business
Global reach with real mid-market rates
Best for freelancers, remote teams, and smaller online businesses
Limited support for African banks compared to others
Payoneer
Excellent for freelancers and exporters
Offers global receiving accounts in multiple currencies
Fees can stack up over time for high-volume users
Chipper Cash / Afroza
Best for smaller payments across Africa
Great for peer-to-peer and early-stage businesses
Limited control for complex B2B needs
2. Track Business FX fees
Use accounting tools like QuickBooks, Zoho, or even Google Sheets to monitor:
Exchange rates at time of payment
Transaction fees
Monthly FX spend trends
Tracking helps you notice patterns and negotiate better terms.
3. Negotiate Smarter Contracts with International Partners
When dealing with recurring international suppliers, negotiate:
Pegged exchange rates
Pricing in local currency
Quarterly adjustments based on FX averages
4. Consider Hedging (for Larger Companies)
If your business handles large FX volumes (e.g., $100k+ monthly), explore FX hedging strategies:
Forward contracts
Currency options
Rate locks through trusted FX partners
FX Doesn’t Have to Eat Your Profits
Every day, FX fees quietly chip away at African business margins. But with Leatherback, you can say goodbye to surprise charges and enjoy real transparency and control. Leatherback enables your business to:
Hold multiple currencies
Convert only when it benefits you
Avoid inflated rates and surprise charges
In global business, every percentage matters. Don’t let FX fees steal yours.
Take back control of your money. Start with Leatherback today.
