Cross-border payments in Africa remain slow, costly, and fragmented. According to the World bank, Sub-Saharan Africa is still the most expensive region in the world to send money, with remittance costs averaging 8.37% in Q2 2024.
For individuals and small businesses, moving money across borders can take days, involve multiple intermediaries, and result in fees and FX losses of over 10%. While traditional providers and fintechs have improved the experience, the underlying infrastructure remains inefficient.
Stablecoins – digital currencies pegged to fiat like the US dollar – offer a compelling alternative. In 2024, stablecoin transaction volumes in Africa topped ~$50 billion, driven by real-world use cases including remittances, SME payments, treasury management, and freelance salaries.
The appeal is clear: instant settlement, low fees, and transparent rails are solving problems that traditional systems haven’t.
Not someday. Not even tomorrow. This is happening today.
A Missed Moment, or a Market Advantage?
Africa is fast becoming a global reference point for stablecoin adoption. But local entrepreneurs still face real barriers – particularly around regulation. Many startups are forced to operate through offshore structures or rely on third-party partnerships to remain compliant, while foreign players often enjoy a smoother path to market.
It’s a familiar paradox. African founders were among the first to see the potential of stablecoins. Yet many are still waiting for regulatory clarity in their home markets.
Take Nigeria, for example. In February 2021, the Central Bank banned banks and financial institutions from supporting crypto asset transactions – a move that proved fatal for local exchanges like Bitfxt, LocalBitcoins, and Paxful.
Since then, the tide has started to turn. Just last year, President Tinubu signed the Investments and Securities Act (ISA) 2024 into law, officially classifying cryptocurrencies and other virtual assets as securities for the first time.
So the question is no longer whether stablecoins work in Africa – that much is clear. The question now is: who gets to build the rails? Without clearer frameworks, local innovators risk being sidelined from the very systems they helped to pioneer.
That said, change is coming. South Africa is also already leading the way, with crypto assets being classified as financial products under the Financial Advisory and Intermediary Services (FAIS) Act in late 2022. While still unregulated, countries like Kenya and Rwanda are testing regulatory sandboxes, and conversations around local currency stablecoins are beginning to pick up.
If done well, these developments could unlock more efficient regional trade and provide African fintechs with a stronger foundation to build on.
Africa’s Early Movers
Some of the continent’s most forward-thinking startups are not just using stablecoins – they’re building the infrastructure to scale them.
Take Yellow Card, a pan-African fintech now operating in over 20 countries. The company has quietly become one of the largest – and first licensed – on- and off-ramps for stablecoins on the continent, enabling users to move between local currencies and digital dollars with ease. By integrating local payments, engaging regulators, and supporting stablecoin rails like USDC and USDT, Yellow Card is powering cross-border commerce, remittances, and treasury flows behind the scenes. Our own portfolio company, Lemonade Payments, recently partnered with the team to make it easier for users to convert major currencies like USD, GBP, and EUR into USDT.
Similarly, Mansa, a stablecoin liquidity provider, raised a $10 million seed round earlier this year backed by Tether. Mansa is tackling one of the ecosystem’s most critical challenges – ensuring stablecoins are not only accessible, but liquid and usable in local markets. Its infrastructure supports businesses and fintechs looking to settle cross-border payments more reliably.
Both companies reflect the same reality: stablecoins are no longer just a crypto use case. They are becoming embedded in how money moves across the continent-faster, cheaper, and with far fewer friction points than traditional rails.
Looking Ahead
Stablecoins are not a silver bullet. But they are beginning to reshape how value moves across African markets. From reducing costs to enabling new models for payments, aid, and savings, they are already part of the fabric of Africa’s financial future.
At Baobab Network, we see this not just as an investment theme, but a reflection of the kind of innovation our founders are building- practical, grounded, and designed for real-world use. Stablecoins may not be the future of finance everywhere, but in Africa, they’re already shaping the present. And that’s a promising place to build from.
