Sub-Saharan Africa is rapidly adopting cryptocurrency, transforming its financial landscape and emerging as a leader in digital asset innovation. Between July 2023 and June 2024, the region accounted for only 2.7% of global crypto transactions but saw a remarkable $125 billion in on-chain value, according to a new Chainalysis report.

Source: Chainalysis

Leading the way is Nigeria, the continent’s most populous country, which ranks second worldwide in Chainalysis’ Global Adoption Index. This position highlights Nigeria’s vital role in advancing blockchain technology across the region. Additionally, Ethiopia (26th), Kenya (28th), and South Africa (30th) have all entered the top 30 globally, showcasing widespread regional participation.

Stablecoins Stabilize Africa’s Economy

Stablecoins have become essential in Sub-Saharan Africa’s cryptocurrency landscape, making up about 43% of the region’s total transactions. These digital currencies, linked to stable assets like the US dollar, provide a trustworthy value store and enable international payments. This is particularly important in areas with unstable local currencies and limited access to foreign exchange.

Source: Chainalysis

Rob Downes, Head of Digital Assets at ABSA Bank CIB, observed a rising interest in stablecoins among South African institutions. “Our institutional clients are particularly interested in using stablecoins as a tool for managing liquidity and reducing exposure to currency volatility,” Downes explained. 

Furthermore, Chris Maurice, CEO and Co-Founder of Yellow Card, a leading African crypto exchange, highlighted the practical benefits of stablecoins in addressing the region’s foreign exchange issues. 

“About 70% of African countries are facing an FX shortage, and businesses are struggling to get access to the dollars they need to operate,” Maurice stated. In countries like Nigeria, where the local currency has drastically devalued, stablecoins offer a crucial alternative.

DeFi Adoption Soars Across the Continent

Sub-Saharan Africa is at the forefront of Decentralized Finance (DeFi) adoption, driven by the urgent need for accessible financial services in a region with limited traditional banking. The World Bank reported that as of 2021, only 49% of adults in Sub-Saharan Africa had a bank account, underscoring the significant opportunity for crypto-based solutions.

Nigeria stands out as a key player in this movement, attracting over $30 billion in DeFi investments last year. Cryptocurrencies in Africa serve more than just speculative purposes. Increasingly, Africans use crypto for business transactions, protecting against inflation and conducting frequent, small-scale retail transfers.

Source: Chainalysis

Moyo Sodipo, COO and Co-founder of Busha, a Nigerian crypto exchange, highlighted the tangible benefits of crypto adoption. “People are starting to see the real-world utility of cryptocurrency, especially in day-to-day transactions, which is a shift from the earlier view of crypto as just a get-rich-quick scheme,” Sodipo stated. 

He further added that activities like paying bills, topping up mobile credit, and making retail purchases are now routinely handled through cryptocurrency platforms.

A notable impact of cryptocurrency in Sub-Saharan Africa is on remittances. Traditional remittance methods are often expensive and inefficient, but crypto-based alternatives are transforming this landscape. Data indicates that sending a $200 remittance from Sub-Saharan Africa costs about 60% less with stablecoins compared to conventional fiat methods.

Regulators Catalyze Africa’s Crypto Boom

As cryptocurrency adoption continues to surge across Sub-Saharan Africa, regulators are working to keep pace with the rapidly evolving landscape. In South Africa, the Financial Sector Conduct Authority (FSCA) has classified crypto assets as financial products, providing a degree of regulatory clarity. However, specific regulations for stablecoins are still in development.

Rob Downes of ABSA Bank noted, “We’re working closely with regulators like the [South African] Reserve Bank to ensure we’re prepared for any developments around stablecoin regulation, which we expect will be a major area of focus soon.” 

Chris Maurice of Yellow Card sees stablecoins playing a central role in opening up African economies to global markets. “Stablecoins are actually developing a market for African currencies that have never had an international presence,” he noted. 

This increased economic openness has the potential to foster greater price transparency and encourage foreign investment, ultimately contributing to the region’s economic growth and development.