The continent’s embrace of digital dollars reveals the failure of domestic currencies and the hollowing of central bank authority

The Story

Stablecoins now account for 43% of cryptocurrency transaction volume across sub-Saharan Africa in 2024, representing a remarkable shift from speculative crypto assets toward practical dollar-denominated digital payments. Nigeria processed nearly $22 billion in stablecoin transactions between July 2023 and June 2024, while South Africa has witnessed stablecoins displace Bitcoin as the country’s most-used cryptocurrency. The adoption extends beyond retail speculation into corporate treasury management, cross-border B2B payments, and freelance payroll—use cases that suggest stablecoins are embedding themselves into Africa’s business infrastructure rather than serving merely as speculative vehicles.

Yellow Card, a pan-African stablecoin infrastructure provider, reports that 99% of its transactions now involve stablecoins, serving over 30,000 businesses across 20 African countries and processing over $6 billion in transactions. Corporate stablecoin transactions grew 25% year-over-year, driven by businesses seeking alternatives to unreliable banking infrastructure and volatile local currencies. The shift from consumer speculation to business adoption represents an inflection point: stablecoins are transitioning from fringe financial instruments to critical business tools.

Yet this financial innovation carries profound implications for monetary sovereignty. As millions of Africans and thousands of businesses conduct commerce in dollar-backed digital tokens, central banks lose both visibility into money flows and control over monetary policy transmission. Nigeria’s eNaira, the central bank digital currency launched to compete with private stablecoins, saw 98% of wallets inactive by 2023 according to IMF data—a spectacular failure that illustrates how citizens prefer private USD-backed tokens over official alternatives when given choice.

The Context

The stablecoin surge reflects fundamental currency crises across multiple African economies. Nigeria’s naira lost over 75% of its value against the dollar over five years, Zimbabwe’s dollar depreciated more than 75% between 2020 and early 2024, and Sudan’s pound lost over 80%. Even Kenya’s shilling, backed by a doubling GDP between 2008 and 2024, depreciated 50% since 2021. These collapses destroy savings, disrupt commerce, and drive citizens toward any alternative offering stability—increasingly, dollar-pegged stablecoins.

The remittance context proves equally compelling. Sub-Saharan Africa received $54 billion in remittances in 2023, yet sending money to the region remains the costliest globally, averaging 7.9% in fees for a $200 transfer according to World Bank data. Traditional remittance corridors charge $7.60 to send $200 from the United States to Nigeria, while stablecoin transfers cost less than $0.01. This 99.9% cost reduction creates irresistible economic incentives for diaspora communities to bypass traditional channels.

Foreign exchange shortages compound the appeal. Approximately 70% of African countries face forex crises, making it difficult for businesses to obtain dollars needed for operations. In Nigeria, where official exchange rates diverge dramatically from parallel market rates, stablecoins provide backdoor dollar access that government capital controls attempt to prevent. This dynamic positions stablecoins as monetary policy circumvention tools rather than mere payment innovations.

The regulatory response reveals deep ambivalence. South Africa has issued over 70 licenses to Virtual Asset Service Providers (VASPs), creating Africa’s most advanced regulatory framework for digital assets. Nigeria initially cracked down, ordering unlicensed offshore exchanges to cease operations and pursuing Binance for allegedly facilitating $35 million in money laundering. Yet Nigeria subsequently licensed three domestic exchanges for the first time, acknowledging that prohibition proves unenforceable when citizens possess strong adoption incentives.

The Intelligence

For fintech investors, Africa’s stablecoin adoption validates the thesis that payment infrastructure built on dollar-pegged assets can capture value that traditional banking cannot deliver. Companies like Yellow Card, Afriex, Bitmama, and Fonbnk are building multi-billion dollar transaction volumes by solving fundamental problems—currency volatility, remittance costs, forex access—that traditional financial institutions either ignore or profit from exacerbating.

The infrastructure layer deserves particular attention. Consumer-facing stablecoin apps face commoditization risk with low barriers to entry and minimal differentiation. Infrastructure providers offering on/off ramps, liquidity engines, FX orchestration, KYC/AML layers, and developer APIs create defensible businesses by embedding themselves into payment flows that fintechs, platforms, and institutions depend upon. These infrastructure plays prove capital-intensive but generate durable competitive advantages once established.

The B2B opportunity exceeds consumer applications. While retail users adopt stablecoins for savings and remittances, businesses deploy them for treasury management, supplier payments, and payroll—use cases with substantially higher transaction values and stronger retention characteristics. Yellow Card’s 25% year-over-year growth in corporate transactions suggests that businesses, once convinced of stablecoin reliability, become sticky customers with predictable revenue streams.

For venture capitalists, the regulatory arbitrage proves both opportunity and risk. South Africa’s clarity creates an environment where institutional capital can deploy confidently, while regulatory uncertainty in markets like Ghana and Kenya creates opportunities for early movers willing to navigate ambiguity. The challenge lies in distinguishing between markets where regulation will evolve favorably versus those where governments may ultimately prohibit stablecoins to protect monetary sovereignty.

The monetary sovereignty implications deserve consideration. As stablecoin adoption accelerates, African central banks face hollowing of domestic currencies and erosion of monetary policy effectiveness. Capital controls become unenforceable when citizens can convert local currency to stablecoins through peer-to-peer platforms. Tax collection suffers as economic activity migrates onto blockchain rails that governments struggle to monitor. These dynamics create political pressures that could trigger harsh regulatory responses despite current economic pragmatism.

The Bridge

For VCs Reading This: “If you’re evaluating African stablecoin opportunities, prioritize three strategic positioning approaches:

• Infrastructure over applications—Conduiit and Juicyway exemplify platforms building liquidity rails and payment orchestration that apps depend upon; infrastructure commands premium valuations due to defensibility
• Regulatory-first strategies in South Africa—over 70 VASP licenses issued create legitimate market where institutional capital can deploy; companies like Yellow Card leverage regulatory compliance as competitive advantage
• Vertical integration for corporate customers—businesses require comprehensive solutions combining stablecoin access, forex hedging, and compliance tools; point solutions face commoditization while integrated platforms capture value”

Fintech Investors Active in African Stablecoins: “- Quona Capital – Impact-focused fintech fund with African stablecoin thesis, backing infrastructure plays that bridge traditional finance with digital assets

• Tekedia Capital – Pan-African VC fund describing stablecoins as ‘lifeline’ for millions; focuses on payment infrastructure and remittance corridors
• Binance Labs – Crypto-native investor backing African exchanges and infrastructure providers; typical check size $500K-$2M for seed stage”

For Founders Reading This: “Key takeaways for building sustainable African stablecoin businesses:

• Target B2B before B2C—corporate treasury and payroll applications offer higher transaction values and better retention than retail speculation; Yellow Card’s 25% corporate growth validates this approach
• Build regulatory moats proactively—South Africa’s licensing creates barriers to entry that protect compliant players; pursue licenses before they become mandatory
• Integrate traditional finance rails—pure crypto solutions face adoption friction; platforms bridging stablecoins with mobile money and banking infrastructure scale faster
• Focus on specific corridors initially—remittance flows between U.S. and West Africa or intra-African trade routes offer concentrated demand; geographic focus enables operational excellence
• Design for offline functionality—many African markets lack consistent internet connectivity; solutions enabling offline stablecoin transactions serve broader markets than cloud-dependent platforms”

Africa’s stablecoin revolution represents the most significant monetary sovereignty challenge facing the continent since independence. As citizens and businesses embrace dollar-pegged digital assets, central banks confront existential questions about currency relevance and monetary policy effectiveness. The outcome will determine whether African nations can maintain financial sovereignty or whether private stablecoins effectively dollarize economies through technological circumvention. For entrepreneurs and investors, the opportunity proves substantial—but so too are the political risks as governments recognize that stablecoin adoption fundamentally threatens their monetary authority.