Original title: Africa Doesn’t Have a Dollar Problem. It Has a Plumbing Problem
Original translation: April
When stablecoins begin to enter cross-border settlement in Africa, the industry typically asks three questions:
- Will it exacerbate capital outflows and impact local currencies and regulatory systems?
- If connecting counterparties and payment channels is enough to conduct business, where exactly is the barrier to entry?
- As participants increase and spreads continue to narrow, where will long-term value settle?
What I see is precisely another thing: stablecoins are providing Africa with an opportunity to restructure the liquidity market.
01 What Africa lacks is not a sum of dollars, but a set of liquidity plumbing
I have summarized this problem as a plumbing problem.
In many African cross-border trade scenarios, money is not entirely absent, but it cannot reach the correct counterparty at the right time and at an executable price.
Trade revenue may be in Europe or the United States, while procurement payments need to be completed in China or Asia, and local fiat delivery is also required.
Funds are scattered across different countries, accounts, banks, and counterparties, lacking a financial hub that can effectively channel liquidity in, out, aggregate, and circulate.
Therefore, the problem is not just the total amount of dollars, but whether dollars can be mobilized at the right nodes.
A participant holding dollars or stablecoins does not mean that an importer on the other end can obtain an executable quote; the existence of an exchange rate in the market does not mean that a company can complete currency exchange, settlement, and final delivery.
Stablecoins do not create dollars. But for the first time, they have the potential to change the way these fragmented pools of funds are connected: making it easier for funds to be transferred across institutions and time zones, shortening the time gap between quoting, execution, and settlement, and allowing liquidity that was previously trapped in different corridors to form new connections.
And this is precisely where the following three questions truly begin.
02 When liquidity begins to open up, what do regulators really need to address?
Stablecoins will certainly reduce friction in dollar flows and cross-border transfers.
Therefore, capital outflows, local currency pressure, and market stability are issues that any regulator must seriously address.
But what I see in Africa is not that regulators are naturally averse to stablecoins. On the contrary, many governments and regulators who wish to push trade, capital, and the financial system forward are actively exploring how to gradually bring fragmented, inefficient, and low-visibility liquidity into a more open and connectable market.
Relying long-term on official quotes, bank credit lines, and fragmented settlement paths cannot support further opening of trade and regional economies.
The opportunity for stablecoins lies in enabling funds trapped in different accounts, different countries, and different counterparties to be transferred, settled, and redeployed into the market more quickly.
This does not mean that opening up comes without costs. For many African markets, this is often not a matter of speeding up an existing mature system, but rather a fundamental transition from fragmented, low-visibility liquidity structures to more market-based price discovery.
The existing banking, foreign exchange, payment, and informal settlement chains all need to be readjusted; demand, exchange rates, bank positions, and market expectations will also be repriced.
Therefore, the presence of friction does not mean that countries are unwilling to open up. Precisely because change brings significant impact, opening up must be accompanied by sequencing, speed, regulated channels, and liquidity buffers.
The real question to answer is not "whether to explore stablecoins," but rather: which real trade and settlement needs should first gain more efficient liquidity? Which channels must remain within the regulated system? Who provides buffer liquidity? Under what conditions can the market afford more complete price discovery?
Stablecoins are not the end point of opening up;
they are an opportunity for Africa to turn opening up into infrastructure.
03 Connecting Liquidity: What Capabilities Really Need to Be Built
From the outside, this looks like a business with low barriers to entry: find stablecoins, find local fiat channels, find counterparties, and you can start quoting.
But what stablecoins truly unlock is not a one-time trading opportunity, but the opportunity to build the next-generation liquidity market.
Building a market requires not just the ability to match one trade, but a set of foundational capabilities that allow transactions to continue, scale, and be accepted by all parties.
First, settlement capability. It includes both global dollar liquidity and settlement capabilities—international counterparties, banking networks, SWIFT, stablecoins, custody and clearing networks—as well as local fiat collection, payment, and final delivery capabilities. The real difficulty is not sending money from one end, but ensuring that funds can be executed and delivered on both the global and local ends.
Second, compliance and regulatory capability. Trust here is not an abstract sense of brand. It is manifested in customer identity, source of funds, transaction records, sanctions screening, exception handling, audit capability, 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, institutional FX trading operations capability. This is not ordinary back-office operations, but quoting, position management, trade confirmation, fund transfers, settlement sequencing, failed trade handling, and risk control. Between completing a single trade and stably operating a cross-border liquidity market lies an entire set of institutional-grade FX capabilities.
The real barrier to entry in this market is not whether you can connect one liquidity source, but whether you can organize global settlement, local delivery, compliance and regulation, and institutional FX operations into a sustainable market capability.
04 When Liquidity Becomes More Efficient, Where Does Value Go?
Investors will ultimately ask: as participants increase and quotes become more transparent, will FX spreads continue to narrow, eventually leading to a race to the bottom?
If the business remains solely in stablecoin trading and FX spreads, the answer is likely yes.
Narrowing spreads is not an anomaly, but a sign of a gradually maturing liquidity market.
But the real question worth asking is not whether the spread will narrow, but rather: when liquidity is organized more efficiently, what new financial capabilities can enterprises, banks, and trade markets build on top of it?
Liquidity → Settlement → Treasury Management → Trade Finance
Liquidity enables funds to be found, quoted, and allocated; settlement enables cross-border transactions to be completed stably, traceably, and deliverably; sustained transaction and settlement capabilities allow enterprises to begin managing multi-country funds, currencies, and positions; and when orders, invoices, logistics, and payments can be connected, trade finance can form a credit capability that is assessable and priceable.
Here we must remain clear-headed: 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 will not stop at the spread.
The narrowing of the spread is not the squeezing out of opportunity, but the beginning of the market moving from trading a sum of money to organizing corporate funds and real trade.
05 From Connecting Funds to Forming a Market
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 structure, liquidity distribution, and cross-border needs.
The value of stablecoins is not to replace the existing financial system, nor simply to make the dollar run faster. It allows funds that could not be effectively pooled and circulated to become financial resources that can be settled, managed, and also serve real trade.
This is the most noteworthy opportunity for African stablecoins: not a faster rail, but a reorganization of the liquidity market.
