REPORT | Stablecoins Could Reshape African Payments But Face Infrastructure, Regulatory Hurdles, Says Onafriq Report

Stablecoins could transform Africa’s fragmented and costly payments landscape, but

• weak infrastructure,
• regulatory gaps and
• limited real-world applications

risk slowing adoption, according to a new report by fintech firm Onafriq.

The whitepaper by the Pan-African fintech, Onafriq, argues that dollar-pegged digital currencies have the potential to make cross-border transactions faster, cheaper and more accessible, particularly in a region where sending money remains among the most expensive globally.

Average remittance costs to sub-Saharan Africa exceed 8%, well above the global average, the report said.

Stablecoins can significantly reduce settlement times, enabling near-instant transfers compared with the days often required by traditional banking systems. However, the report highlights that users still face high “on-ramp” and “off-ramp” costs when converting between digital assets and local currencies, limiting their practical benefits.

“Users have simply traded one set of problems for another,” the authors noted, pointing to fees, delays and counterparty risks when converting stablecoins into usable cash.

Despite these challenges, adoption is growing. Stablecoins account for roughly 43% of cryptocurrency transaction volume in sub-Saharan Africa, driven largely by demand for faster and cheaper cross-border payments, according to industry data cited in the report.

The study compares the current state of stablecoins to the early internet era, arguing that infrastructure must mature before widespread adoption can occur. Key gaps include

• inconsistent internet access,
• complex blockchain protocols,
• limited user-friendly wallets and
• a lack of harmonised regulation across African markets.

Regulation remains the most critical barrier, the report said. While jurisdictions such as the United States, European Union and Japan have introduced frameworks for stablecoins, most African countries lack clear rules, creating uncertainty for businesses and consumers.

The absence of regulation also raises risks, including potential “digital dollarisation,” where widespread use of foreign-issued stablecoins could weaken local currencies and banking systems.

Still, the report outlines three potential high-impact use cases: a pan-African payment network enabling seamless cross-border trade, stablecoin-based savings products for the unbanked, and programmable money for sectors such as agriculture and supply chains.

To unlock these opportunities, the authors call for coordinated action between regulators, financial institutions and technology firms, including clearer licensing regimes, stronger infrastructure and the development of locally issued stablecoins.

“Stablecoins are having their ‘1995 internet moment,’” the report said, adding that Africa has a chance to shape the technology’s evolution rather than remain a passive adopter.

Stay tuned to BitKE on stablecoin developments across Africa.

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