Sub-Saharan Africa is seeing growing adoption of stablecoins, a trend primarily fueled by the continued devaluation of local currencies, notably in Nigeria and Ethiopia. According to a recent report from Chainalysis, stablecoin transactions now represent 43% of total crypto transaction volume in the region.
Currency devaluation: a key factor in crypto adoption
The devaluation of local currencies has pushed many individuals and businesses to seek more stable alternatives to preserve their wealth. Stablecoins, which are cryptos backed by stable assets like the US dollar, offer an attractive solution. They help circumvent extreme fluctuations in local currencies and maintain the value of financial assets.
For example, Nigeria remains a global leader in crypto adoption, with approximately $59 billion in transactions between July 2023 and June 2024. About 85% of transfers, mainly retail and business, are less than $1 million. The devaluation of the naira has accentuated this trend.
In Ethiopia, ranked 26th in crypto adoption, the stablecoin market is the fastest growing in Africa, up 180% year-on-year. In July, the birr lost 30% of its value after monetary restrictions were eased to gain support from the IMF.
Future prospects
Eric Jardine, head of cybercrime research at Chainalysis, explained that the adoption of stablecoins is closely linked to the devaluation of local currencies. He added that this crypto adoption could grow rapidly whenever local currencies lose value, but it can also increase outside of these circumstances.
a similar trend in South Africa, where institutional clients say stablecoins are a “game changer” for managing liquidity and reducing exposure to currency volatility.
Finally, the adoption of stablecoins in sub-Saharan Africa, driven by currency devaluation, is transforming the financial landscape. This crypto trend promises to strengthen economic stability and offer viable solutions to regional monetary challenges.
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