Original Title: Africa Doesn't Have a Dollar Problem. It Has a Plumbing Problem
Original Compilation: April
When stablecoins began entering Africa for cross-border settlement, three questions were typically asked in the industry:
- Will it accelerate capital flight and impact local currencies and regulatory systems?
- If connecting counterparties and payment channels is all it takes to start business, where exactly is the barrier to entry?
- As participants increase and spreads continue to narrow, where will long-term value accumulate?
What I see, however, is something else: stablecoins are offering Africa an opportunity to restructure its liquidity market.
01 What Africa Lacks Is Not a Sum of Dollars, but a Set of Liquidity Plumbing
I once summarized this as a plumbing problem.
In many African cross-border trade scenarios, money isn't entirely absent; it simply cannot reach the right counterparty at the right time and at an executable price.
Trade proceeds may be in Europe or the US, while procurement payments need to be made in China or Asia, and local currency settlements are required domestically.
Funds are scattered among different countries, accounts, banks, and counterparties, lacking a financial hub that can effectively channel, pool, and circulate liquidity.
Therefore, the problem is not just the total supply of dollars, but whether dollars can be mobilized at the right nodes.
A participant holding dollars or stablecoins does not mean an importer on the other end can receive an executable quote; the existence of a market exchange rate does not guarantee a company can complete the currency exchange, settlement, and final delivery.
Stablecoins do not create dollars. But for the first time, they have the potential to change how these dispersed pools of funds are connected: making it easier to transfer funds across institutions and time zones, shortening the time lag between quoting, execution, and settlement, and enabling liquidity previously trapped in different corridors to start forming new linkages.
And this is precisely where the next three questions truly begin.
02 As Liquidity Becomes More Accessible, What Do Regulators Really Need to Address?
Stablecoins will certainly reduce the friction of dollar movement and cross-border transfer.
Therefore, capital flight, pressure on local currencies, and market stability are issues any regulator must seriously confront.
But what I've seen in Africa is not regulators' inherent rejection of stablecoins. On the contrary, many governments and regulators hoping to advance trade, capital, and the financial system are actively exploring how to gradually bring fragmented, inefficient, and low-visibility liquidity into a more open and connectable market.
Long-term reliance on official quotes, bank quotas, and fragmented settlement paths cannot support further trade and regional economic openness.
The opportunity with stablecoins lies in enabling funds previously trapped in different accounts, countries, and counterparties to be transferred, settled, and redeployed into the market faster.
This does not mean openness comes without cost. For many African markets, this often isn't about speeding up an already mature system, but a fundamental transition from a fragmented, low-visibility liquidity structure towards a more market-driven price discovery.
Existing banks, foreign exchange, payment, and informal settlement chains all need adjustment; demand, exchange rates, bank positions, and market expectations will also be repriced.
Therefore, friction does not mean nations are unwilling to open up. Precisely because change will have significant impact, openness must be sequential, paced, and accompanied by regulated channels and liquidity buffers.
The real question to answer is not "whether to explore stablecoins," but: Which real trade and settlement needs should first gain more effective liquidity? Which channels must remain within the regulated system? Who provides buffer liquidity? Under what conditions can the market bear more complete price discovery?
Stablecoins are not the end goal of openness;
They represent Africa's chance to build openness into infrastructure.
03 To Connect Liquidity, What Capabilities Truly Need to Be Built?
From an external view, this might look like a business with a low entry barrier: find stablecoins, find local fiat channels, find counterparties, and you can start quoting.
But what stablecoins truly unlock is not a single transaction opportunity, but the opportunity to build the next generation of liquidity markets.
Building a market requires not just matching ability, but a foundational set of capabilities to make transactions continuous, scalable, and acceptable to all parties.
First, is settlement capability. This includes both global dollar liquidity and settlement capabilities—international counterparties, banking networks, SWIFT, stablecoins, custody, and clearing networks; and local fiat collection and final delivery capabilities. The real challenge isn't sending money from one end, but ensuring funds can complete executable delivery on both the global and local sides.
Second, is compliance and regulatory capability. Trust here is not an abstract brand feeling. It manifests as customer identity, fund sources, transaction records, sanctions screening, exception handling, audit capabilities, and ongoing regulatory communication. Only when banks, regulators, and global counterparties can see and manage risks can liquidity move from fragmented bilateral networks into the formal financial system.
Third, is institutional foreign exchange trading operations capability. This is not ordinary back-office operations, but quoting, positioning, trade confirmation, fund transfers, settlement timing, failed trade handling, and risk control. Between completing a single transaction and stably operating a cross-border liquidity market lies an entire suite of institutional-grade FX capabilities.
The real barrier to entry in this market is not the ability to connect a piece of liquidity, but the ability to organize global settlement, local delivery, compliance, regulation, and institutional-grade FX operations into sustainable market capabilities.
04 As Liquidity Becomes More Efficient, Where Will Value Flow?
Investors ultimately ask: as participants increase and pricing becomes more transparent, will FX spreads keep narrowing, eventually turning into a race to the bottom?
If the business stays only at stablecoin trading and FX spreads, the answer is likely yes.
Spread compression is not an anomaly; it's a sign of a maturing liquidity market.
But the real question isn't whether spreads will fall, but: once liquidity is organized more effectively, what new financial capabilities can businesses, banks, and trade markets build on top of it?
Liquidity → Settlement → Treasury Management → Trade Finance
Liquidity allows funds to be located, quoted, and transferred; settlement enables cross-border transactions to complete stably, trackably, and deliverably; continuous transaction and settlement capabilities allow businesses to start managing funds, currencies, and positions across multiple countries; and when orders, invoices, logistics, and payments can be connected, trade finance can potentially form assessable, priceable credit capabilities.
Clarity is essential here: settlement capability does not automatically become trade finance capability. The latter also requires risk models, real trade data, recourse structures, and balance sheets.
But this precisely explains why the opportunity won't stop at spreads.
Spread compression does not squeeze out opportunity; it marks the beginning of the market evolving from trading a sum of money towards organizing business funds and real trade.
05 From Connecting Funds to Forming Markets
Africa does not need to replicate the financial infrastructure of other markets. It has the opportunity to build a new set of market capabilities around its own trade structures, liquidity distribution, and cross-border needs.
The value of stablecoins is not to replace the existing financial system, nor simply to make dollars move faster. They enable funds that previously could not effectively pool and flow to start becoming financial resources that can be settled, managed, and used to serve real trade.
This is the most noteworthy opportunity for stablecoins in Africa: not a faster rail, but a reorganization of the liquidity market.
