The emergence of stablecoins in Sub-Saharan Africa is reshaping the financial landscape, offering crucial support to countless individuals grappling with economic instability.
Recent reports indicate that stablecoins now account for 43% of total cryptocurrency transactions in this region. This trend is largely driven by currency devaluation and inflation, prompting many individuals and businesses to pursue alternatives that provide greater stability for their financial needs.
A Shift in Financial Policymaking
Stablecoins have seen widespread adoption in countries like Nigeria and Ethiopia, where rising inflation has led citizens to turn to digital currencies such as USDT and USDC to safeguard their savings.
In Nigeria, for example, stablecoin transactions under $1 million soared to nearly $3 billion early this year, highlighting their significance for small to medium-sized remittances. Moyo Sodipo, COO of the Nigerian crypto exchange Busha, noted, “It has now become practical for everyday transactions,” as many Nigerians utilize cryptocurrencies for bill payments and other financial dealings.
Source: Chainalysis
This trend aligns with a broader pattern observed throughout Sub-Saharan Africa. Representing 2.7% of global transaction volume, the region boosted on-chain value by $7.5 billion from July 2023 to June 2024. Countries like Kenya and South Africa are also experiencing a rise in crypto adoption, with Kenya ranking 11th and South Africa 31st in Chainalysis’ Global Crypto Adoption Index.
Stablecoins as Economic Stabilizers
Stablecoins are becoming essential in supporting economies that are prone to disruption due to currency volatility. Chris Maurice, the CEO of Yellow Card, highlighted that these digital currencies provide a practical alternative for businesses engaged in international trade, especially in light of foreign exchange shortages in Nigeria. “The banks don’t have dollars, the government doesn’t have dollars,” he emphasized, pointing to the urgent need for alternatives.
As of Oct. 3, 2014, the market cap of cryptocurrencies reached $2.08 trillion. Chart: TradingView.com
Ethiopia is witnessing a substantial increase in stablecoin transactions, with retail-sized transfers growing by 180% year on year. This surge follows the government’s significant devaluation of the birr by limiting local currency circulation to curb borrowing from foreign lenders. Such trends illustrate how stablecoins can act as a buffer for economies attempting to bolster resilience against financial pressures in economically volatile regions of Sub-Saharan Africa.
Source: Chainalysis
The Future of Crypto in Sub-Saharan Africa
The potential for economic growth is becoming clearer as Sub-Saharan Africa continues to adopt cryptocurrencies—particularly stablecoins. The World Bank reported that as of 2021, only 49% of the region’s population had access to a bank account. For many individuals who are unbanked or underbanked, cryptocurrencies present a promising opportunity for greater financial inclusion.
Improving regulatory frameworks across various jurisdictions also bolster growth in the crypto sector. South Africa is leading the way with a robust regulatory approach that empowers cryptocurrency businesses while safeguarding consumer interests. As more people pursue enhanced access and stability through digital currency, Sub-Saharan Africa is poised to take a significant role in global cryptocurrency adoption.
Featured image from SEGURA Consulting LLC, chart from TradingView
