South Africa looks to stablecoins to simplify African trade

The African Continental Free Trade Area (AfCFTA) aims to make it easier for African countries to trade with one another. But for many businesses, sending money across the continent remains more complicated than moving goods. A South African company paying a supplier in Malawi may still have that payment routed through banks outside Africa before it reaches its destination. The transaction often passes through the US dollar, adding costs, delays and extra currency conversions.

Moving money is still a challenge

AfCFTA is encouraging more trade within Africa, but banks and payment networks still reflect trading patterns that centred on Europe, Asia and the United States. South Africa illustrates that gap. Only about 15% to 18% of the country’s trade is with other African nations, despite growing efforts to increase regional trade. Businesses face more than customs checks and border delays. They also have to pay suppliers, settle invoices and move money through banking systems that often do not connect smoothly. “If goods have crossed the border but payments remain slow or expensive, businesses still carry that burden,” said Ifelade Ayodele, CEO of cross border remittance platform Blaaiz.

A new option for cross-border trade

People often associate stablecoins with cryptocurrency, but several African fintechs now use them to process cross border payments. Onafriq, Yellow Card and Flutterwave already use stablecoins to settle some transactions. The technology works behind the scenes, moving funds before converting them back into local currency. Most customers never notice that stablecoins play a role in the payment. Dr Wiehann Olivier, Partner and Global Co-Head of Digital Assets at Forvis Mazars, says this approach can reduce settlement times and lower transaction costs compared with correspondent banking.

Making existing systems work better

Neither Ayodele nor Olivier expects stablecoins to replace banks. Instead, they see stablecoins as another settlement option that works alongside the existing financial system. Businesses trading across Africa still navigate different currencies, banking networks and payment systems. Those differences increase the cost and complexity of moving money across borders. Ayodele believes the biggest opportunity lies in connecting those systems more effectively. Better interoperability could reduce settlement costs, improve liquidity and give businesses more certainty when making cross-border payments.

Regulation will influence adoption

Technology alone will not determine how quickly stablecoins gain wider use. South Africa has introduced a regulatory framework for crypto asset service providers. Nigeria, Kenya, Ghana and Mauritius are also developing their own rules. Olivier believes exchange control laws could have a bigger influence than crypto regulations. Those rules determine how money moves across borders and will shape how businesses use stablecoin based settlement. AfCFTA has opened the door to more trade across Africa, but businesses also need a simpler way to move money between countries. Stablecoins may become part of that solution, provided regulation and financial infrastructure continue to evolve alongside growing trade.