How Stablecoins Help Beat Inflation in Africa

Key Takeaways

• Stablecoins have become daily financial tools for savings, payments, and trade in Nairobi and Lagos.

• Inflation, currency volatility, and high remittance costs are driving adoption.

• Integration with mobile money systems makes stablecoins practical and familiar.

• Risks persist around reserves, scams, and evolving regulations.

Introduction

On a Tuesday morning in Nairobi, Amina sends an invoice to a client in Berlin. By the afternoon, USDC arrives in her wallet, and within minutes, she cashes out through M-Pesa. What once seemed experimental is now an ordinary part of business, enabled by platforms such as Kotani Pay that link stablecoins directly to mobile money.

Across the continent in Lagos, Chinedu manages a small shop and stores his working capital in Tether’s USDt. Holding what he calls “digital dollars” allows him to restock imported goods without watching his profits disappear in the naira’s unpredictable swings.

He is far from alone. Between July 2023 and June 2024, Nigeria processed nearly $22 billion in stablecoin transactions, representing the largest volume in Sub-Saharan Africa.

The motivation is largely economic. Sending money into the region through traditional remittance channels still costs an average of 8.45% (Q3 2024), while digital-first services have lowered fees to about 4%. By adding a stablecoin step and a trusted local cash-out option, users save even more—particularly on the $200–$1,000 transfers that sustain families and small enterprises.

Although costs differ by market, the underlying idea is consistent. For millions dealing with inflation, currency restrictions, and some of the most expensive remittance corridors in the world, stablecoins provide a simple way to preserve value and move funds using nothing more than a phone.

The Macro Squeeze: Inflation, FX, and Remittance Friction

Nigeria’s cost-of-living crisis persists. Inflation has eased from early-2025 peaks but remains severe, with the consumer price index (CPI) reaching 21.88% in July 2025. Purchasing power continues to erode.

Since 2023, Nigeria’s currency reforms, including several devaluations and a move toward a market-based FX system, have introduced greater volatility for households and importers who price goods in dollars.

Kenya’s experience mirrors this trend, though less intensely. Inflation rose to 4.5% in August 2025, driven by higher food and transport prices, while fluctuations in the shilling maintained strong demand for USD among traders.

Adding to this challenge is the world’s most expensive remittance corridor. According to the World Bank’s Remittance Prices Worldwide report, Sub-Saharan Africa averaged 8.45% in Q3 2024, exceeding the UN’s 3% Sustainable Development Goal target and surpassing the global average of 6%. For families sending $200–$500, these costs can determine whether they meet rent or fall behind.

These economic realities explain why stablecoins have become indispensable for freelancers, merchants, and small business owners across Nairobi, Lagos, and other cities.

Why Stablecoins? The Practical Economics

For people earning income across borders or saving in weak local currencies, stablecoins serve as “digital dollars” that bring two key advantages: transfers occur around the clock, and fees are typically lower than those charged by traditional financial intermediaries, particularly for cross-border payments.

This combination of speed and affordability underpins their growing popularity in emerging markets.

Data from Chainalysis shows that stablecoins now account for the largest share of everyday crypto activity in Sub-Saharan Africa. In Nigeria, transactions below $1 million were dominated by stablecoins, totaling nearly $3 billion in Q1 2024. Across the region, stablecoins represent roughly 40–43% of total crypto volume.

Tether’s USDt and USDC remain the most widely used. As costs influence behavior, Tron has become the preferred network for transferring USDT, hosting the majority of its supply by mid-2025. The reasoning is straightforward: users gravitate toward the cheapest and most dependable options.

How It Works on the Ground

On-/Off-Ramps and P2P

In both Kenya and Nigeria, people typically access USDT or USDC through a mix of regulated fintech platforms and peer-to-peer (P2P) marketplaces, then cash in or out via banks or mobile money.

Yellow Card, active in around 20 African nations, conducts most of its operations using USDT. Its Yellow Pay service enables cross-border transfers and local cash-outs, including mobile money options. Stablecoins now account for 99% of Yellow Card’s total business.

Mobile Money Bridges

In East Africa, mobile money platforms such as M-Pesa provide the foundation. Kotani Pay offers conversion services that allow partners to settle payments in stablecoins and pay users directly through M-Pesa.

In a pilot with Mercy Corps Kenya, Kotani facilitated USDC-to-M-Pesa savings. The process is simple: receive in USDC, convert to shillings, and spend via the same wallet already in use.

Fintech Scale-Ups

Some fintech companies keep the crypto infrastructure invisible to users. Chipper Cash, for instance, relies on USDC behind the scenes to enable instant dollar transfers across its network. It also adopted Ripple’s technology to expand coverage across nine African markets. For customers, the experience feels like an upgraded, faster version of traditional wallets.

Everyday Use Cases

• Savings: Individuals convert small balances into digital dollars to shield their income from inflation.

• Payroll and Gigs: Freelancers and digital workers receive payments in USDC, converting only the amount needed for local expenses.

• Trade and Inventory: Small and medium enterprises use stablecoins for supplier payments and invoice settlements. Yellow Card notes business transactions as one of its fastest-growing segments.

• Remittances: Stablecoin transfers combined with local cash-out options often undercut traditional remittance costs, especially for $200–$1,000 transfers.

With over 2 billion mobile money accounts globally, Sub-Saharan Africa stands at the center of this digital transformation.

Regulation and Policy Drift

Nigeria

Regulation has evolved quickly. After years of prohibition, the Central Bank of Nigeria lifted its banking ban in December 2023, allowing banks to open accounts for virtual-asset service providers (VASPs).

By 2024, authorities intensified enforcement, targeting naira-based P2P platforms and Binance, detaining executives and suspending naira trading pairs. Investigations and policy disputes continued into 2025.

Meanwhile, the Securities and Exchange Commission (SEC) updated its crypto framework in January 2025, and the Investment and Securities Act (ISA 2025) introduced stricter registration and disclosure rules. Further licensing and marketing oversight are expected.

Kenya

Kenya’s Finance Act 2023 established a 3% Digital Asset Tax, later upheld by the Supreme Court in late 2024. Mid-2025 brought another policy change: the Finance Act 2025 repealed the tax and replaced it with a 10% excise duty on fees charged by virtual-asset providers. Operators must now manage excise, VAT/DST, and reporting compliance simultaneously.

Regulatory frameworks continue to shift rapidly, so users are urged to consult the latest local guidance before selecting a provider.

Did you know? Roughly one in six Kenyan adults lacks any formal financial account. As of 2021, formal financial inclusion stood at 83.7%, leaving 11.6% of adults completely outside formal and informal financial systems.

The Risk Ledger

Peg and Counterparty

Stablecoins are only as strong as their reserves and governance structures. Reports from the Bank for International Settlements (BIS) and the International Monetary Fund (IMF) caution that uncontrolled growth could trigger financial stability issues, such as forced reserve liquidations or widespread “dollarization” that undermines national monetary control.

The USDC de-peg of March 2023 revealed how quickly confidence can erode. Independent audits have also identified persistent gaps in transparency and concentration of risk among issuers.

Operational

Everyday challenges include P2P scams, wallet breaches, bridge failures, and limited access to cash-out options. Nigeria’s 2024–2025 regulatory crackdown froze accounts and stranded user balances overnight, showing how abruptly liquidity can disappear.

Policy

At a systemic level, dependence on dollar-pegged stablecoins risks accelerating informal dollarization and diverting payments away from regulated banking channels. Policymakers are responding with tighter licensing rules, stricter reserve management requirements, and greater issuer transparency.

Conclusion

Stablecoins will not erase inflation or replace FX policy, but they have already reshaped how people save, earn, and send money across borders in Nairobi, Lagos, and beyond. Their integration with mobile money makes them accessible and practical.

Builders see stablecoins as everyday financial tools, while regulators focus on potential dollarization and systemic risk. The interplay between innovation and oversight will determine their long-term impact.

For individuals, the safest strategy remains straightforward: minimize costs, choose reputable providers, and stay informed as regulations evolve.

Looking ahead, expect clearer reporting requirements, more stringent licensing, and greater adoption of “crypto in the background” systems—where users no longer handle tokens directly, yet experience faster, cheaper, and more reliable digital transactions.

FAQs

Why are Africans increasingly using stablecoins?

Stablecoins offer a practical way to save, send, and receive money amid inflation, currency controls, and high remittance fees. They provide stable, dollar-linked value and faster, cheaper cross-border transfers compared to traditional methods.

Which stablecoins are most popular in Africa?

The leading stablecoins in Africa are Tether’s USDt and USDC. These are widely used for payments, savings, and trade, especially in Nigeria and Kenya, where they dominate most crypto transactions under $1 million.

How do stablecoins connect with mobile money in Africa?

Services such as Kotani Pay in Kenya link stablecoins to mobile money platforms like M-Pesa, allowing users to receive USDC, convert it into local currency, and spend it directly through their phones.

What are the main risks of using stablecoins?

Risks include reserve transparency and de-pegging issues, scams, wallet theft, and sudden regulatory crackdowns that can freeze accounts or disrupt access, as seen in Nigeria during 2024–2025.

How are African regulators approaching stablecoins?

Regulators in Nigeria and Kenya are tightening oversight. Nigeria’s SEC and Central Bank now require licenses and disclosures, while Kenya’s Finance Act 2025 introduced a 10% excise duty on virtual-asset service fees. Policies continue to evolve rapidly.