Local Stablecoins Show Promise as Transaction Connectors

Across Africa, several local stablecoins have emerged—ZARP and ZARsc in South Africa, cNGN in Nigeria, nTZS in Tanzania—with the goal of putting African currencies on-chain. While these initiatives face challenges replicating the network effects of established dollar-backed stablecoins, they offer a unique value proposition as transaction connectors rather than direct replacements for existing payment systems.

The Current Landscape

As of September 21, ZARP had R74.6 million ($4.6 million) in circulation with R92.8 million in reserves, while cNGN surpassed ₦3.75 billion ($2.82 million). These stablecoins aim to improve payment speed, cost efficiency, and interoperability.

The key challenge lies in establishing demand: who needs these local tokens on-chain enough to actively use them? Dollar-backed stablecoins already possess global market reach, liquidity, and a clear utility for users seeking dollar exposure or cross-border payments.

Why Local Stablecoins Matter as Transaction Connectors

The wholesale business-to-business case appears more compelling than the retail one. For local stablecoins to succeed, they need to answer three questions:

1. Who wants to hold them?
2. Who will accept them?
3. Who will provide liquidity when needed?

A Tanzanian importer could convert shillings to nTZS, move it on-chain, then exchange for USDT to pay a Chinese supplier—demonstrating how local stablecoins can bridge between local and global markets.

This model recognizes that local stablecoins don’t necessarily need to become universally adopted but can serve as valuable connectors in specific transaction flows. They address a critical pain point: the difficulty of directly converting fiat currencies into digital assets in many African markets, enabling access to broader financial ecosystems.