At the Moonshot event organized by TechCabal on Wednesday, October 15, David Salami, CTO of Hyperbridge-a firm focused on blockchain interoperability-called on African banks, fintech companies, and mobile money operators to pioneer the issuance of stablecoins pegged to their local currencies. He stressed that digital versions of African fiat money could slash cross-border transaction expenses by up to 99%, allowing the continent to overcome the inefficiencies and currency disputes caused by its fragmented financial systems.
In a succinct, TEDx-style talk, Salami portrayed money as a “collective story.” He drew a parallel with the Rai stones used by the Yap community-large limestone discs serving as currency in Micronesia, whose worth was determined by communal agreement-to demonstrate how financial value is fundamentally a social construct. From this perspective, stablecoins could emerge as Africa’s programmable currency of choice, transforming domestic payment systems and encouraging local issuance. His presentation, titled “The Promise of Stablecoins in Africa,” underscored the transformative potential of these digital tokens for the continent’s financial landscape.
Highlighting the shortcomings of Africa’s financial infrastructure, Salami referenced World Bank data showing that remittance fees average 7.9%-the highest globally. He illustrated these challenges with practical examples: a fish vendor in Zambia losing 5-7% on regional transfers and a South African expatriate incurring hefty fees when sending $1,000 to Ghana.
Sub-Saharan Africa is already at the forefront of stablecoin adoption, with these digital assets accounting for 43% of the region’s cryptocurrency transaction volume, Salami noted. Blockchain-based transactions can cost as little as one cent and settle instantly, in stark contrast to traditional wire transfers that may take several days and charge fees ranging from $15 to $50.
While dollar-pegged stablecoins such as Tether’s USDT provide faster and more affordable payment solutions, Salami warned of risks like dollarization and capital flight. He advocated for stablecoins linked to local currencies, such as the Nigerian naira or South African rand, citing pilot initiatives like Nigeria’s cNGN and the rand-backed ZARP as encouraging models.
Issuing stablecoins tied to local currencies could lessen reliance on foreign intermediaries and promote financial inclusion, particularly for the informal sector, which represents roughly 70% of Africans utilizing mobile financial services. Moreover, these tokens could expose African currencies to global users and attract foreign investment into tokenized local assets. “Local stablecoins have the capacity to accelerate intra-African trade,” Salami affirmed.
The economic logic behind stablecoin issuance resembles a low-risk arbitrage strategy akin to how traditional banks handle their “float.” When users deposit fiat currency (like naira or rand) to mint stablecoins, these funds are held in reserve and invested in secure, high-yield instruments such as government bonds. This approach generates returns while the stablecoins themselves circulate without earning interest. In Africa, local bond yields ranging from 8% to 12%-significantly higher than the 4-5% yields on U.S. Treasuries-create an attractive margin. Salami highlighted Tether’s $179 billion market capitalization and $14 billion profit in 2024 from this model, managed by a compact team of 150, demonstrating the scalability and profitability potential for African issuers with established trust, regulatory compliance, and user adoption.
Emerging regulatory frameworks, including crypto regulations and central bank digital currency (CBDC) initiatives, are fostering a supportive environment. Salami encouraged institutions to leverage their existing credibility and infrastructure to advance in this space.
For broad adoption, secure cross-chain bridges are critical to prevent the billions lost annually to hacks in the blockchain sector. Without these bridges, blockchain networks remain siloed, unable to transfer assets or allow developers to connect applications across ecosystems. However, traditional bridges-often reliant on trusted intermediaries or multisignature schemes-are vulnerable to cyberattacks.
Salami introduced Hyperbridge’s protocol, which uses cryptographic proofs to eliminate human intermediaries and reduce hacking risks to nearly zero. This technology enables smooth, verifiable transfers of local stablecoins across multiple blockchains without centralized points of failure.
This decentralized method supports widespread adoption by enabling issuers to expand their reach, integrate with mobile wallets, and boost intra-African commerce, all while retaining control over domestic assets. Keeping transactions on-chain also improves transparency for regulators.
Since its launch in 2024, Hyperbridge-a decentralized interoperability network-has connected over 11 blockchain platforms and facilitated more than $50 million in transaction volume.
Salami concluded with a compelling statement: “Money is a narrative we share. For too long, Africa’s financial story has been marked by exorbitant fees, currency disputes, and banking delays. Stablecoins give us the chance to rewrite this narrative. Together, we can create a new financial ecosystem.”
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