Stablecoin adoption is moving from niche corridors to street vendors, says Enza Capital’s Nzwisisa Chidembo. From Moneyweb.
You can also listen to this podcast on iono.fm here.
Few people seem to have noticed, but Africa’s cellphone moment arrived in the financial world when stablecoins appeared seven years ago.
This was the killer blockchain use case that was staring us in the face. Cellphones made information available to everybody pretty much instantly wherever you were in Africa.
Similarly, stablecoins are exploding across Africa because of their ability to transact instantly, anywhere in the world, 24/7 and at very low cost.
Read:
Stablecoins are gaining ground as digital currency in Africa
Stablecoins are $500bn risk to bank deposits, report finds
Africans discovered they could accumulate USD or Euro equivalents without having to go through the central bank. They could settle invoices abroad, send and receive remittances, and hedge against weak local currencies.
Accessibility
The next step in this financial revolution is to get stablecoins into the hands of the street trader and spaza shop owner.
This goal is a lot closer than many people realise, says Nzwisisa Chidembo, chief technology officer at Enza Capital.
Africa is already a leader in mobile payments via cellphones, so it doesn’t take a leap of imagination to understand that this same infrastructure will be adapted to stablecoins.
“In most of our economies on the continent, you’ll find that many people are leveraging mobile payments to transact,” says Chidembo.
“And that is quite popular either through USSD [Unstructured Supplementary Service Data, a protocol allowing cellphone users to interact directly with a service provider’s computers in real time] or SMS.
“There are a number of players now bridging the gap, making it possible to leverage USSD as if they are doing a mobile payment. They then create these virtual digital asset wallets in the backend that have exposure to [stablecoins] such as USDC or USDT. These allow the man on the street to gain exposure and play a part in the digital asset economy.”
Enabling legislation helping
What makes all this possible is the spread of stablecoin-enabling legislation across the continent.
Listen/read: SA (and Sars) on board with global crypto reporting initiative …
The stablecoin evolution is progressing along selected corridors, explains Chidembo, such as tourism.
Enza Capital invested in one such startup allowing tourists to settle payments for hotels and tours via stablecoins at a fraction of the usual bank costs.
“With the advent of digital assets, specifically stablecoins, these [payment] costs can be drastically reduced. And by bundling all those different transactions, they can save the operator of the tours a substantial amount of money,” says Chidembo.
Listen/read: You’ve accumulated some crypto, but how do you spend it?
The payment infrastructure operates in the background and is largely invisible to the consumer. But the result is near instant payments at very low cost.
This type of technology will soon spread to other ‘corridors’ such as retail and even street traders.
Wallets – like bank accounts – will soon be ubiquitous and easy to operate.
It took decades for ATMs to become a trusted means of depositing and withdrawing cash. Digital wallets, resident on cellphones, will take far less time to achieve universal acceptance.
“I personally think that that reality is coming closer for the man on the street,” says Chidembo.
“Why I say this is because we are starting to see even the major players from a payment rails perspective starting to take cognisance of stablecoins and actually starting to use them.”
Expect rapid mainstream adoption soon
Moneybadger introduced bitcoin as a means of paying bills in Pick n Pay stores and is now freely accepted in thousands of retail stores across SA.
The giant leap in stablecoin adoption will come when mobile payment platforms such as M-Pesa in Kenya introduce digital asset capabilities within their wallets. M-Pesa recently partnered with the Abu Dhabi-based ADI Foundation to integrate blockchain infrastructure for stablecoin transactions and cross-border payments, among others.
The launch of ZAR stablecoins such as Zaru and Super ZAR, with Absa now piloting its own stablecoin, points to much more rapid mainstream adoption in the very near future.
Listen/read: Absa’s bold leap into stablecoins
Customers may not know that their transactions are being routed via the blockchain, converted to stablecoins and then converted back again to fiat – but they will notice the near instant speed and much lower costs that come from this new technology.
That’s why street hawkers with cellphones will soon become adopters – whether they know it or not – of this new tech.
