A leading finance expert, Vera Songwe, says the United States’ new stance on stablecoins could significantly benefit Africa’s remittance economy.
She warns that the continent has only a brief window to act before being left behind.
Songwe, the chair and founder of the UN-supported Liquidity and Sustainability Facility and a senior non-resident fellow at the Brookings Institution, argued in an article posted on Friday that Africa cannot ignore the rapid shift in global financial systems.
“African leaders face a defining strategic choice: they can surrender their incomes to intermediaries or actively embrace digital currency trades,” she said.
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Africa loses billions to remittance fees
Remittances are a vital source of income for Africa, far greater than official development aid. The continent receives more than $92.2 billion annually from diaspora communities, but high transaction costs eat into these flows.
Transfer fees average 7.9 per cent, the highest in the world, compared to 4.6 per cent in South Asia.
According to the expert, African families lose about $7.3 billion yearly to fees alone, a figure larger than several African nations’ gross domestic product (GDP).
Despite being on the G20 agenda for over a decade, efforts to reduce costs have yielded “little or no success.”
Pressure may increase further. A provision in US President Donald Trump’s “big beautiful bill” imposes a 3.5 per cent tax on remittances sent by non-US citizens.
That could translate into an additional $3.2 billion in costs for African households, pushing total losses beyond $10.5 billion annually.
At the same time, the US has opened the door to new solutions by legalising dollar-backed stablecoins through the GENIUS Act.
Transfers using stablecoins typically cost about 1 per cent, compared with over 11 per cent through traditional services under the Trump tax.
If just a quarter of Africa’s remittances moved through stablecoins, the continent could save up to $4.8 billion annually.
“This represents more than many countries spend on investment, healthcare or education,” she said.
Meanwhile, Africa is already emerging as a strong market for digital assets. Research by Chainalysis shows the continent recorded $125 billion worth of cryptocurrency transactions in 2024, up $7.5 billion from the previous year, though it still accounts for only 2.7 per cent of global volumes.
Nigeria leads the continent in adoption, ranking first worldwide for stablecoin use and second overall in digital asset activity, with an estimated 26 million users.
Other countries, including Ghana, Ethiopia, Kenya, Morocco and South Africa, are also seeing rapid growth, particularly in regions facing inflation, currency devaluation and low levels of financial inclusion.
Traditional money transfer companies are under pressure. Last year, Western Union app downloads fell 22 per cent, while MoneyGram dropped 27 per cent. Western Union has since moved to integrate stablecoin transfers, underscoring the competitive threat.
Institutional use is also rising. JPMorgan reported a 15 per cent increase in stablecoin usage for cross-border business-to-business payments in 2024, signalling broader acceptance beyond retail consumers.
She further says this could benefit Africa’s small and medium-sized enterprises, many of which are run by women.
Vera Songwe urges Africa to act
The expert urged African governments not to remain passive. She recommended adopting clear regulatory frameworks, supporting Africa-led stablecoin projects backed by diversified reserves such as IMF Special Drawing Rights, and investing in digital infrastructure and financial literacy.
She also emphasised the role of central banks in balancing financial innovation with monetary policy goals, suggesting that they work with institutions such as the Bank for International Settlements and countries like the US and South Korea to develop regulatory sandboxes.
She warned, however, that Africa risks being marginalised if it fails to act.
“The policy designed to extract revenue from immigrant communities may accelerate the financial inclusion that development organisations have purported for decades to solve,” she said.
With South Africa set to host the G20 summit in November, she argued that leaders must place stablecoins firmly on the agenda.
Countries that embrace the shift stand to benefit from lower costs, broader inclusion, and economic growth, while those that resist may see citizens adopt digital tools without proper oversight.