Local Stablecoins Struggle to Gain Traction in Africa

The concept of local stablecoins has been gaining traction in Africa, with several currencies being pegged to African currencies. South Africa's ZARP and ZARsc, Nigeria's cNGN, and Tanzania's nTZS are some examples. However, the question remains: who actually needs these local stablecoins on-chain?

The pitch for local stablecoins is that they can make payments faster, cheaper, and more interoperable. But the reality is that dollar-backed stablecoins already have a global market, network effect, deep liquidity, and a reason for people to hold or use them.

According to the Bank for International Settlements (BIS), the combined stablecoin market stood at about $320 billion at the end of May 2026. Of this value, 99.4% was tied to the dollar. In contrast, local stablecoins lack a similar source of built-in demand.

Another issue is that existing payment systems already exist in many African countries. Bank transfers and mobile money are widely used, making it difficult for local stablecoins to gain traction. The chicken-and-egg problem arises: users need a reason to hold a local token before merchants accept it, while merchants require enough users and liquidity to make acceptance worthwhile.

The retail case for local stablecoins is weak, as consumers may prefer to use dollar-backed stablecoins like Tether's USDT for their convenience. Adding an extra leg in the transaction does not provide obvious value. However, the wholesale case is more nuanced, with potential benefits in cross-border transactions and providing on-chain representation of local currencies.

David Machuche, founder of NedaPay and creator of nTZS, noted that much of the early demand for nTZS came from payment companies, developers, and businesses managing cross-border liquidity. This is a more realistic problem to solve than chasing retail adoption.