The Role of Stablecoins in Africa’s Near-Term Economic Boom (Part-2)

Stablecoins and Real-world assets might be the most important use case for blockchain in Africa.

Stablecoins have emerged as the foundation of decentralized finance (DeFi), offering the stability needed for a sector characterized by innovation and volatility. As the bridge between traditional finance and the DeFi ecosystem, stablecoins like USDT, USDC, FDUSD, WUSD,  and others provide a reliable currency that minimizes exposure to market fluctuations.

Speaking to Canza Finance, Paolo Ardoino, CEO of Tether said:

"Africa stands at a critical juncture where financial inclusion and economic opportunity can redefine the continent’s future. Stablecoins, particularly Tether (USDT), are uniquely positioned to support this transformation by providing a stable, accessible financial tool that addresses real, day-to-day challenges like currency instability, limited access to foreign currencies, and high remittance costs. The unbanked and underserved populations across Africa need more than traditional banking can offer—they need flexible, secure options that bridge global economic systems and empower local communities.”

In Africa, DeFi’s closest equivalent is mobile money and digital banking platforms, such as M-Pesa, which allow users to transfer money, pay bills, and access loans through their mobile phones. These platforms, while offering accessibility to underserved populations, remain centralized and subject to regulatory frameworks, limiting the extent of financial autonomy.

Major Challenges in Africa Today

Despite the success of mobile money, Africa faces challenges in scaling financial systems. Key issues include limited internet connectivity, limited on/off ramp rails, low digital literacy, lack of regulatory clarity, and infrastructural weaknesses. Additionally, reliance on centralized systems leaves users vulnerable to the same challenges present in traditional finance, such as high fees, limited access to international markets, and currency devaluation risks.

How DeFi Can Fill the Void

DeFi has the potential to address these gaps by providing an alternative financial system that operates independently of traditional banks. With DeFi, Africans can access borderless financial services, secure loans, trade digital assets, and earn interest on savings without intermediaries. However, to realize this potential, several supporting factors must come into play:

1. Regulatory Clarity: Clear and supportive regulations are needed to ensure DeFi platforms operate securely and transparently while protecting users.
2. Stablecoin adoption: Continued stablecoin adoption will aid the growth of transformative DeFi solutions
3. Improved Infrastructure: Expanding internet access and increasing digital literacy will be crucial to driving adoption across diverse communities.
4. Trust and Security: Building trust in DeFi solutions through education and strong cybersecurity measures will be vital in addressing concerns around digital fraud and market volatility.

Supporting Factors for DeFi Adoption in Africa

DeFi’s growth in Africa hinges on the interplay of several factors. Governments must create enabling environments through progressive regulation, while tech companies should focus on improving internet penetration and user-friendly interfaces. Educating the public on the benefits of decentralized systems will further boost adoption, allowing DeFi to transform Africa’s financial landscape and spearhead the continent’s next financial revolution.

Paolo Ardoino, CEO of Tether, highlighted the crucial role government policies play in driving crypto adoption.

"Africa’s near-term economic boom, driven by a young, digitally-savvy population and new trade frameworks like the African Continental Free Trade Area (AfCFTA), creates a ripe environment for financial innovation. At Tether, we are committed to supporting this journey by providing secure, reliable financial tools that empower Africans to engage with a global economy on their own terms."

A Step Beyond Remittance - RWAs and DeFi

Many businesses in emerging economies involved in cross-border transactions have been encouraged to explore cryptocurrencies as a medium of exchange. A growing number of these businesses have either adopted DeFi or are actively investigating structured financial services on the blockchain. While there is some skepticism, the interest is real, and the potential for blockchain-based solutions is becoming increasingly tangible for those looking for advanced, secure, and more accessible financial services.

The introduction of tokenized real-world assets within emerging markets will be a game-changer. Giving businesses and individuals the option to seamlessly own, lend, invest in tangible assets, and borrow against these assets will bring unprecedented levels of financial and economic benefits; but this has to be done right - consumer protection has to be top priority for startups and entrenched into the systems that aim to provide scalable decentralized services within emerging economies.

Tether's CEO, Paolo Ardoino, highlighted the critical role of Decentralized Finance in scaling financial inclusion.

“With tens of millions of Tether users across Africa, growing by the day, financial inclusion is becoming a reality, not just a marketing promise. The rising adoption of Tether in countries such as Nigeria, Kenya, and South Africa underscores that stablecoins are not merely an alternative—they’re a catalyst for inclusive economic growth. By removing barriers in cross-border transactions and offering a reliable store of value, Tether helps businesses and individuals protect their assets and improve their financial stability. Furthermore, as Africa explores decentralized finance (DeFi), stablecoins provide a critical on-ramp, enabling secure participation in this evolving ecosystem without the volatility often associated with cryptocurrencies.”