24 November 2023

The Adoption of Stablecoins in Africa

In Africa, where traditional banking reaches only a fraction of the population, stablecoins are emerging as a groundbreaking financial solution. Offering stability and accessibility, these digital currencies are rapidly gaining traction. This article explores the rise of stablecoins in a continent poised for a digital financial revolution.

The Adoption of Stablecoins in Africa


    The Lack of Access to USD in Africa
    The Benefits of Stablecoins for African Countries
    Future of Stablecoin Adoption in Africa

Africa, a continent with a rich and diverse history, faces significant challenges, notably in financial inclusivity. According to the World Bank, only 34% of adults in Africa have a formal bank account, hindering their ability to save, invest, and transact. Stablecoins, a type of cryptocurrency designed to maintain a stable value, typically relative to the US dollar, offer a beacon of hope in this landscape, potentially revolutionizing financial access and usage across the continent.

The Lack of Access to USD in Africa

A crucial driver behind the growing interest in stablecoins is the limited access to USD in Africa. As the world's reserve currency, USD is essential in international trade and commerce. However, obtaining USD is challenging in African countries with high inflation and strict currency controls. These controls, coupled with underdeveloped financial systems, make it difficult to exchange local currencies for USD, opening a niche that stablecoins are well-positioned to fill.

The Benefits of Stablecoins for African Countries

Stablecoins present several key advantages. They offer a more stable store of value in inflation-prone countries, provide an efficient way to send and receive money without a bank account, and facilitate affordable investment in assets like stocks and real estate. These benefits can help Africans in rural or financially underserved regions to enhance their financial security and economic opportunities.

A More Efficient Way to Send and Receive Money.

Stablecoins are revolutionizing financial transactions in Africa, particularly in regions with limited access to traditional banking services. In Kenya, for instance, the adoption of stablecoins has surged, with mobile money platforms like M-Pesa incorporating stablecoins into their services. This integration enables Kenyans to send and receive stablecoins seamlessly, facilitating cross-border payments and remittances at lower costs compared to traditional methods.

The Risks of Stablecoins

However, it is important to note that stablecoins also pose some risks. One primary concern is the potential for peg loss, where the stablecoin's value can plummet if it loses its peg to the underlying asset, often the US dollar. Counterparty risk arises from centralized entities, or custodians, that issue stablecoins and hold the collateral assets. Regulatory uncertainty and evolving legal landscapes can create challenges for users. Limited adoption and liquidity issues may make trading difficult. Centralized control can raise concerns about censorship and access restrictions, while some stablecoins lack transparency regarding reserves and operational processes. The reliance on complex technologies, potential market manipulation, and limited consumer protections add to the risk factors associated with stablecoins. Staying vigilant and informed is essential when using stablecoins.

Future of Stablecoin Adoption in Africa

Government and Regulatory Responses in African Countries Towards Stablecoins

The regulatory landscape for stablecoins in Africa is complex and evolving, with different countries taking varied approaches based on their unique economic contexts and concerns.

Nigeria: The Central Bank of Nigeria (CBN) has been proactive in setting guidelines for cryptocurrency usage, including stablecoins. Recognizing the rapid growth of digital currencies in the country, the CBN's guidelines aim to protect consumers from fraud and mitigate the use of cryptocurrencies in illegal activities. The approach reflects a balance between fostering innovation and ensuring financial stability. In May 2022, Nigeria's markets regulator published rules for crypto assets, which could have implications for stablecoin usage and adoption (Reuters).

Kenya: The Central Bank of Kenya (CBK) is considering the regulation of stablecoins, with a specific focus on preventing their use for money laundering and other illicit activities. The CBK's cautious stance reflects a broader concern about the potential risks stablecoins pose to Kenya's financial system. This consideration for regulation underscores the need to balance financial innovation with consumer protection and economic security (Bloomberg).

South Africa: The Financial Sector Conduct Authority (FSCA) of South Africa has been monitoring the development of stablecoins with a particular focus on their potential impact on the financial system. The FSCA's approach highlights a concern for financial stability and the integrity of the financial sector. South Africa is expected to have regulations for tokenized deposits and crypto assets by 2025, indicating a forward-thinking approach to integrating stablecoins into the financial landscape (Engineering News).

These examples reflect a broader trend in African countries towards cautious but increasingly informed and proactive regulatory approaches to stablecoins. The primary concerns revolve around ensuring financial stability, preventing illegal activities, and protecting consumers, while also recognizing the potential of stablecoins to enhance financial inclusivity and efficiency. As the market matures and understanding of stablecoins improves, regulatory frameworks are likely to become more refined, shaping the future landscape of digital currencies in Africa.

African Countries Leading in Stablecoin Usage

A number of African countries are on the forefront of stablecoin usage. These countries include:

Reasons for the Forefront of Stablecoin Usage

There are a number of reasons why these African countries are on the forefront of stablecoin usage. These reasons include:

  • The lack of access to formal financial services: As mentioned above, many Africans do not have access to formal financial services. This makes it difficult for them to save money, send and receive money, and invest in their businesses. Stablecoins offer a way for Africans to access these services without the need for a bank account.
  • The high cost of remittances: Remittances are a major source of income for many African families. However, the cost of sending and receiving remittances can be high. Stablecoins can help to reduce the cost of remittances by providing a more efficient and affordable way to send and receive money.
  • The growing popularity of cryptocurrencies: Cryptocurrencies are becoming increasingly popular in Africa. This is due to a number of factors, including the lack of access to formal financial services, the high cost of remittances, and the increasing popularity of online gambling and other forms of online entertainment. As cryptocurrencies become more popular, so too will stablecoins.


The adoption of stablecoins in Africa is still in its early stages, but it is growing rapidly. As more and more Africans become aware of the benefits of stablecoins, and as the infrastructure for using stablecoins continues to develop, the adoption of stablecoins is expected to continue to grow rapidly.

Stablecoins offer a number of potential benefits for Africans, including a more stable store of value, a more efficient way to send and receive money, and a more affordable way to invest. As stablecoin adoption continues to grow, it is likely to have a significant impact on the African economy.

Please be aware that: Cryptocurrencies are unregulated in the UK; Cryptocurrencies are not protected under Financial Ombudsman Service or Financial Services Compensation Scheme (FSCS); Profits may be subject to capital gains tax; The value of investments can go down as well as up.

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