Stablecoins are a game changer for Africa, providing a solution to digitised financial transactions for the region's underbanked and unbanked, as well as global interoperability to a continent where access to hard currency is frequently restricted and remittance costs are among the highest in the world.
This is according to Jonathan Katende, an African entrepreneur based in the US, a Western Union Foundation Fellow, and founder of Lipaworld, a venture-backed fintech business dedicated to providing borderless financial tools to the world's underserved.
This observation comes as the informal economy continues to be underserved by traditional banking institutions, as evidenced by delayed international payments, expensive cross-border costs, and small businesses failing to operate digitally or secure finance.
In an interview with ITWeb Africa, Katende pointed out that Stablecoins provide a secure, dollar-backed alternative to unpredictable local currencies as well as an entrance point into the digital economy that does not require a regular bank account.
According to a recent analysis by Yellow Card, a Stablecoin payment infrastructure provider, more than 54 million people on the continent possess digital assets, with Sub-Saharan Africa having the highest rate of Stablecoin adoption globally (9.3%).
Nigeria accounts for nearly half of the total, with 25.9 million users and an 11.9% penetration rate, making it one the world's largest adopter of digital assets.
Katende told ITWeb Africa that the informal economy is the lifeline of many Africans but endures costly processes through established banking institutions, therefore Stablecoins give a much-needed alternative.
He explained: “The informal economy has long been underserved by banks, too costly to onboard, too risky to lend to, too fragmented to understand. But it’s also where the majority of Africans earn a living.
"Digitising cash through Stablecoins offers traceability, reduced friction, and better financial planning. It also enables new forms of credit, savings, and insurance to emerge tailored to their needs.”
Katende went on to clarify that unlike Bitcoin, which is a decentralised digital currency that is not tethered to any fiat currency and may fluctuate dramatically, Stablecoin is equivalent to the US dollar.
“Unlike Bitcoin, which is highly volatile and speculative, stablecoins like USDC are pegged 1:1 to the US dollar and backed by regulated reserves. This makes them ideal for everyday use.
"In Africa, where currency depreciation and inflation are common, Stablecoins provide a dollar-denominated safety net and allow cross-border commerce, freelance work, and remittances to happen affordably and instantly.
"Bitcoin is not an ideal cryptocurrency to use when you want to transact, as you lose the value of your appreciating Bitcoin as opposed to a Stablecoin,” he said.
He added: “With platforms like Lipaworld, users can receive payments from abroad, send each other P2P payments instantly, while purchasing essentials, and build financial resilience without ever stepping foot in a bank.”
When it comes to broad acceptance, Katende believes more might be done, including education.
“There’s still a long way to go to achieve mass adoption. Much of the current crypto education is limited to speculation or trading, but the conversation must shift toward utility.
That is how Stablecoins can be used for real-world needs like paying for school fees, groceries, and transport. More public-private partnerships, merchant acceptance, fintech-led community workshops, and simplified on-ramps are key to unlocking trust and adoption at scale,” he concluded.
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