Same Stablecoin, Different Bill: Why Africa's Cash-Out Costs Climb to Nearly 20%

Stablecoins promise cheaper, faster money transfers
into Africa, but new data shows that the real cost of turning digital dollars
into local cash often remains high and depends heavily on who controls each
corridor.

A January review of 66 African stablecoin routes by
payments firm Borderless.xyz shows that users on the continent face the widest
conversion spreads in the world, even as other regions see much tighter
pricing.

Across nearly 94,000 rate observations, Africa posted
a median spread of 299 basis points, or about 3%, on stablecoin-to-fiat
conversions, compared with roughly 1.3% in Latin America and just 0.07% in
Asia.

In practice, that means costs ranged from about 1.5%
in South Africa to nearly 19.5% in Botswana, a 13-fold gap on one continent.

Source: Borderless.xyz

Most Expensive Stablecoin Region

These spreads reflect the difference between a
provider’s buy and sell rate for a stablecoin-fiat pair, similar to a bid-ask
spread in traditional markets, and represent the execution cost that users pay
when they convert into local currency.

In South Africa, a relatively liquid FX market with
several providers, the median spread was only 152 basis points, roughly in line
with some Latin American corridors. Botswana’s corridor sat at 1,944 basis
points, or 19.4%, while Congo’s exceeded 13%, both shaped by single-provider
dominance and limited market depth.

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Mid-range corridors that carry much of Africa’s
stablecoin activity also remain expensive. Nigeria’s naira, Kenya’s shilling
and Ghana’s cedi all clustered near the 300 basis point mark, even though
multiple providers operate in each market.

The core picture that emerges is that competition, not
technology, sets what users pay. Where several providers compete in a corridor,
spreads generally sit between about 150 and 410 basis points; where one
provider operates alone, costs often jump above 1,300 basis points, or more
than 13%.

Competition, Not Blockchain, Drives the Real Cost

In Zambia, the difference between the best and worst
provider reached 650 basis points, enough to swing the cost of a single
transfer by 6.5%, while in Tanzania the range was about 310 basis points.

Borderless.xyz also compared stablecoin mid-rates with
traditional interbank FX to measure a “TradFi premium”. Globally, stablecoin rates were only about 5 basis points more expensive than bank FX on average,
and slightly cheaper for major currencies, but in Africa the median premium
reached 119 basis points, or about 1.2% above interbank, with wide differences
by country.

Botswana’s corridor showed stablecoins pricing cheaper
than banks, while Congo’s extreme premium reflected a single provider quoting
one static rate and parallel-market dynamics.

The data suggests that while stablecoins can beat
those headline fees and speed up settlement, elevated spreads in many African
corridors continue to erode their advantage, especially where one provider
still sets the terms of trade.

This article was written by Jared Kirui at www.financemagnates.com.



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