This article was contributed to by Ifelade Ayodele, CEO and co-founder of Blaaiz
Several African nations have recently embraced visa-free policies for fellow African travelers. Passport holders from any African country can now enter Seychelles, The Gambia, Benin, Kenya, and Rwanda without a visa. This is a major step toward deeper continental integration, signaling a commitment to freer movement, stronger economic ties, and a more unified future. But while physical borders are opening, financial barriers must be removed just as swiftly. Moving money across the continent remains costly and fragmented, with over 42 currencies. The urgency to prioritise seamless payments grows by the day. While a single currency may not be feasible, a unified, African-backed stablecoin (dubbed AFT) could be the bridge that brings the continent closer together—faster.
It’s been established over time that the potential of stablecoins in Africa is becoming impossible to overlook, offering significant benefits for industry players and governments. But turning this vision into reality requires careful, deliberate action. Building an African-backed stablecoin is no small feat. it will demand precision, expertise, and a deep understanding of the continent’s financial landscape. Amongst other measures, three key elements will be essential to making it work: the peg mechanism, governance structure, and multi-level implementation.
Pegging stability: Tapping into Africa’s rich resources
Volatility is a major challenge for many African currencies. Take the Nigerian naira which has consistently lost value over the past decade, a trend seen across much of the continent. This raises an important question: what should an African stablecoin be pegged to? The key here is to tie the coin’s value to an asset of enduring stability—otherwise, the effort risks falling short.
Africa’s wealth of natural resources offers a unique opportunity. Precious metals like gold, platinum, and diamonds are widely recognised and their value remains stable over time. Africa can create a stable and credible currency by pegging the African stablecoin to a widely accepted commodity like gold.
Strategic commodities such as crude oil and natural gas could also be considered. Oil-dependent economies like Nigeria and Angola might benefit from a hybrid peg involving oil reserves. However, volatility remains a concern, so a more diversified approach may be necessary. One such option is a commodity basket—combining gold, key agricultural exports, and industrial metals. This approach would spread risk and help insulate the stablecoin from fluctuations in any commodity’s value.
The goal is clear: to create a stablecoin that remains resilient to market fluctuations, ensuring broad acceptance across the continent. By anchoring the currency to Africa’s abundant resources, the continent can build a financial system that is not only predictable but also deeply rooted in its strengths.
Governance: Ensuring fairness and long-term success
As with any ambitious financial initiative, the governance structure will play a pivotal role in determining the success of the African-backed stablecoin. With 54 countries involved, the governance framework must be transparent and inclusive. Africa is a continent marked by diverse economies, political systems, and financial infrastructures, so the governance of this stablecoin must reflect this complexity.
One possible solution is to form a coalition of African financial institutions and regional economic bodies responsible for overseeing the stablecoin’s issuance, stability, and adoption. Institutions like the African Development Bank (AfDB) could take charge in ensuring that the stablecoin aligns with broader economic objectives and promotes long-term sustainability across the continent. Regional economic communities such as ECOWAS, EAC, and SADC could also tailor the coin’s implementation to each bloc’s unique economic dynamics, ensuring smoother adoption and fostering greater cooperation between nations.
To ensure credibility and stability, the governance framework should incorporate transparent monetary policies, smart contract-based issuance, and effective regulation to prevent market manipulation or oversupply. This will help build trust and ensure the stablecoin remains a reliable tool for economic integration.
Multi-level flexibility: A tailored approach to Africa’s diverse economies
Even as we advocate for a unified African stablecoin, a multi-tiered approach would be necessary to accommodate the continent’s economic diversity. Take for instance, at the top level, a Pan-African AFT, backed by a diversified basket of commodities, could serve as the standard means of trade for cross-border transactions and large-scale corporate dealings. This would provide a stable and unified currency for major economic exchanges across Africa.
In addition to the Pan-African model, regional AFTs—such as AFT-West, AFT-East, AFT-South, and AFT-Central—could be developed. These regionally focused stablecoins, pegged to local reserves, would allow for a gradual and tailored adoption across different economic areas. This phased approach would help address regional disparities and ensure smoother integration into the broader financial system.
Lastly, sector-specific AFTs could cater to specific industries like trade, remittances, or interbank settlements. These specialised stablecoins would ensure seamless transactions within particular sectors, making AFT adaptable to the diverse needs of businesses and consumers alike.
This multi-level flexibility ensures that the African-backed stablecoin can support a range of economic activities, from large-scale trade agreements to everyday consumer transactions. It also enables smoother integration across different economic regions and industries, laying the foundation for a truly unified financial ecosystem.
The road ahead: Overcoming challenges
While the potential of an African-backed stablecoin is clear, several challenges must be addressed. Political resistance, regulatory hurdles, cybersecurity risks, and the complexity of coordinating 54 nations’ financial systems pose significant obstacles. However, these challenges are not insurmountable.
Some African nations are already exploring digital currencies and blockchain technology. Nigeria’s cNGN and Ghana’s e-Cedi are notable examples of how central banks are testing digital currency solutions. The success of these initiatives will be crucial in demonstrating the feasibility of a continent-wide stablecoin.
Establishing an African-backed stablecoin could transform Africa’s economic future. By anchoring the currency to Africa’s valuable natural resources, establishing a transparent governance structure, and implementing a flexible, multi-tiered approach, AFT could become the backbone of intra-African trade and financial integration. This would provide the financial infrastructure needed to unlock Africa’s full economic potential, making cross-border trade easier, more affordable, and more efficient than ever before.
Note: This article builds on prior discussions about digital assets and assumes some familiarity with the fundamentals of stablecoins, including asset backing, on-chain governance, and market liquidity. If you haven’t already, consider reading Part 1 for additional context.
Ifelade Ayodele is the CEO and Co-Founder of Blaaiz, an early-stage cross-border payments company revolutionising financial transactions for businesses and individuals across Africa, Canada, the USA, and Europe. Ife also serves as a director at Payaza, a payment service provider enabling seamless payment processing services and mobile payment solutions for businesses of all sizes.
