Analysts Evaluate Stablecoin Exchange Costs in Africa

Recent analysis indicates that Africa has the highest costs for converting stablecoins into fiat currencies, with a median spread of 299 basis points, or approximately 3%. This figure far surpasses Latin America’s 1.3% and Asia’s 0.07%.

Transaction fees across the continent show significant variability. In South Africa, conversion fees are around 1.5%, while Botswana experiences a staggering rate of 19.5%. This variance can be attributed to the level of competition and liquidity in local markets:

• Countries with multiple exchange providers generally see fees between 1.5% and 4%.
• Conversely, markets dominated by a single operator often face costs exceeding 13%.

Botswana reported the highest conversion fee in January at 19.4%, with the Congo also experiencing high costs above 13%. In contrast, South Africa benefits from a more developed currency market, resulting in lower costs.

The study also assessed the differences between stablecoin rates and traditional interbank rates, revealing that while the global average difference is only 0.05%, in Africa, it rises to 1.19%.

Analysts noted the extreme fragmentation of the African financial market, where there is little correlation among national currency exchange rates. Each of the 13 countries analyzed operates under its own unique market conditions rather than adhering to broader continental trends.

In a related context, leaders from the Africa Bitcoin Corporation previously indicated that Bitcoin could potentially mitigate critical challenges in Africa, including issues related to devaluation and inflation.