African businesses adopt stablecoins to manage currency risk
African businesses are increasingly turning to stablecoins to manage currency volatility and foreign exchange shortages, industry executives have said.
They said dollar-backed digital assets were helping businesses preserve value and settle cross-border transactions more efficiently as foreign exchange constraints persisted across several African markets.
The executives made the observations during a panel discussion on “The Future of Cross-Border Payments in Africa: Stablecoins at the Core” at the Africa Stablecoin Consortium programme in Accra.
Ms Lasbery Chioma Oludimu, Group Vice President, Operations, and Managing Director of Yellow Card Nigeria, said currency instability and limited access to foreign exchange had become major operational challenges for businesses across the continent.
She cited the experience of a Nigerian company that secured a euro-denominated loan but later struggled to meet its repayment obligations after the naira depreciated sharply against major international currencies, increasing the real cost of servicing the debt despite years of repayments.
“Businesses are suffering because of currency volatility in Africa, as well as foreign exchange shortages, and stablecoin has come to solve some of these challenges,” she said.
Panel members said businesses also faced difficulties accessing foreign exchange through official channels, increasing the cost of meeting international payment obligations.
They said stablecoins offered faster and lower-cost cross-border transfers while providing access to digital dollar liquidity in markets where foreign exchange remained constrained.
Mr Arnoud d’Yve de Bavay, Africa Lead Expansion at Tether, said the increasing adoption of stablecoins reflected their ability to address practical business and consumer needs.
He said although stablecoins first gained prominence through cryptocurrency trading, they were increasingly being used for payments, savings and remittances.
Mr d’Yve de Bavay said stablecoins should complement rather than replace traditional financial institutions by improving payment efficiency and expanding access to financial services.
Mr Dominic Mulinda, Chief Product Officer of HoneyCoin, said seamless cross-border payments also depended on reliable liquidity, banking partnerships and regulatory compliance.
He said stablecoins could simplify international payments when supported by the appropriate financial infrastructure.
Representing the Bank of Ghana, Mr Hayford Kumah, Head of the Fintech Oversight and Supervision Unit, said digital assets and stablecoins were likely to play an important role in the future of payments and financial services.
He said regulators were working to balance innovation with financial stability and consumer protection.
Stablecoins are digital assets whose value is typically pegged to reserve assets, such as the United States dollar, to reduce the price volatility commonly associated with cryptocurrencies such as Bitcoin and Ethereum.
They are increasingly being used globally for payments, remittances, savings and cross-border transactions.
Source: GNA