The Currency analytics
By James Thorp
Stablecoin users across Africa get hammered by conversion costs. A new study from Borderless.
The January analysis looked at 66 stablecoin routes across Africa and tracked nearly 94,000 rate observations. Results weren't pretty.
Botswana takes the crown for worst rates.
The country's single stablecoin provider charges nearly 19.5% to convert USDC or USDT into local pula. South Africa sits at the other end with reasonable 1.
Competition drives everything here. South Africa's competitive market keeps median spreads at just 152 basis points.
Zambia and Tanzania show how provider choice matters for your wallet. In Zambia, the gap between cheapest and most expensive conversion hit 650 basis points.
The study also compared stablecoin rates against traditional bank foreign exchange. Globally, stablecoins cost just 5 basis points more than interbank rates.
Stablecoin premiums over bank rates hit 119 basis points across the continent. Botswana actually beats bank rates despite its high stablecoin spreads.
Borderless.xyz CEO Alex Nyaga didn't mince words about the findings. "The lack of competition in many African markets allows providers to set disproportionately high spreads," he…
The African Fintech Alliance jumped on the issue in early February. The group announced plans to link local fintech firms with international stablecoin providers.
But it's not just individual traders getting squeezed. The African Chamber of Commerce reported in January that small businesses in Ghana and Kenya struggle with operational…
Kenya's Central Bank took notice. On February 8, the bank said it's exploring regulatory frameworks to attract more stablecoin providers.
International bodies are watching too. The International Monetary Fund released a statement February 9 expressing concern over African stablecoin spreads.
The African Development Bank announced February 10 it might fund digital currency education initiatives.
Nigerian fintech Paystack launched its own awareness campaign February 11. The company wants to educate users about stablecoin advantages and pitfalls for remittances.