Stablecoins May Address Forex Risks Businesses Face in Africa—Ledig

“One major issue you’ll find in about 70 per cent to 80 per cent of African countries, especially for businesses with global exposure, is access to foreign exchange.

“The ability to access foreign exchange, to hedge against currency risks, and to sell goods and services while getting paid in a strong, globally leveraged currency like the US dollar, are some of the biggest challenges businesses face,” he stated, listing other issues as security risks, inadequate regulatory frameworks, and a lack of proper legal protection.

He blamed the inability of African nations to update their forex processes as the reason for this, noting that, “When you use FX systems designed for doing business in the 1970s, you simply can’t keep up with today’s global pace.”

“When it comes to foreign exchange, there are traditional markets for FX facilitation. However, in countries like Nigeria, Kenya, Malawi, Ghana, and Egypt, many of these traditional markets are broken. They tend to favour certain types of businesses, and if you don’t fit into those categories, you’re likely to struggle with accessing and managing foreign exchange for your operations,” Mr Iwu disclosed.

However, he pointed out that the blockchain technology and stablecoins are gradually bridging the gap because they provide a more flexible alternative as they are often more liquid than the US dollar itself.

“Foreign exchange in Africa is a big problem. Traditional systems have failed us, and I see stablecoins stepping in to bridge this gap because they are properly digitized.

“Stablecoins are going to be a major financial engine in Africa, and I don’t just mean USD-backed stablecoins. It also includes local stablecoins like the CNGN,” he said,” referencing the strong adoption of stablecoins like USDT and USDC among the younger generations, emphasizing that stablecoins are already becoming a major part of the financial system.

He also praised the CNGN as the first proper attempt to create a regulated Nigerian stablecoin, expressing hope that more African countries will follow suit.

Mr Iwu stated that Ledig is in the financial market to help businesses navigate the FX struggles they go through.

“We help companies, including those facilitating payments for retail users, access liquidity. Our OTC desk enables high-ticket, high-volume foreign exchange and stablecoin conversions between local currencies and stablecoins, and vice versa.

“We also provide hedging instruments that allow businesses to protect themselves against currency exchange risks.

“Whatever you are doing in Africa, whether it’s trade financing, payments, e-commerce, trading, imports, exports, Ledig helps guarantee stablecoin liquidity you can leverage to scale, removing the FX hurdles that usually slow businesses down,” he stated, averring that many companies serving the retail trade sector rely on Ledig’s infrastructure to serve their customers.

“While having the US dollar for foreign exchange protection is important, having a properly digitized Nigerian Naira that is accessible to people and businesses outside Africa is equally critical. It’s initiatives like this that are also very useful for companies like Ledig,” Mr Iwu submitted.

Business Post reports that Ledig Technologies is a fintech company focused on providing financial solutions for businesses with foreign exchange exposure to Africa.