Advancing Digital Trade in Africa Using Blockchain and Stablecoins

A collaboration involving the African Continental Free Trade Area (AfCFTA) Secretariat, Iota Foundation, the Tony Blair Institute, and the World Economic Forum is set to create a digital platform that aims to transform trade in Africa. This initiative, known as the Africa Digital Access and Public Infrastructure for Trade (ADAPT), will leverage blockchain and stablecoins to facilitate cross-border payments and enhance trade efficiency across the continent.

Key Takeaways

ADAPT Initiative: Launched by a coalition to digitalize trade in Africa using blockchain and stablecoins.
Goals: To generate an additional $70 billion in trade annually, reduce border clearance time to under three days, and cut cross-border payment fees to below 3%.
Launch Timeline: Initial rollout will begin in Kenya in Q1 2024, expanding to Ghana and another country by 2027, with a full-scale operation aimed for 2035.
Trade Inefficiencies: Current challenges include lengthy paper-based processes and slow border payments.
Growing Crypto Adoption: Africa is experiencing a boom in cryptocurrency usage, with substantial projected revenue growth.

Efforts underway to digitize trade in Africa with blockchain, stablecoins

Main Content

A coalition comprised of the African Continental Free Trade Area (AfCFTA) Secretariat, the Iota Foundation, the Tony Blair Institute, and the World Economic Forum is working together to create a digital platform focused on transforming trade throughout Africa. This initiative, named the Africa Digital Access and Public Infrastructure for Trade (ADAPT), aims to serve as an open-source digital framework that facilitates cross-border payments through stablecoins, in addition to storing digital trade documents and offering interoperable digital identities, as outlined by the Iota Foundation.

Dominik Schiener, co-founder and chairman of the Iota Foundation, shared on X that the goal for ADAPT is to be operational in all 55 African nations by 2035, significantly enhancing trade-related processes. Some key aspirations of this project include generating an additional $70 billion in annual trade, cutting down border clearance times from as much as 14 days to less than three days, and decreasing cross-border payment fees that currently range between 6% and 9%.

Africa, Payments, Digital, Iota, Stablecoin _Source:_Dominik Schiener

“Border and customs clearance will change from taking weeks to just hours; cross-border payments will drop to under 3%, allowing exporters access to worldwide trade finance resources," stated Schiener.

Initial Rollout of ADAPT Set for Early 2024

The Iota Foundation announced that the launch of ADAPT will commence in Kenya in the first quarter of 2024, followed by expansions into Ghana and another undisclosed country. The full-scale launch of the initiative is planned to progress from 2027 through 2035.

“This will be a challenging journey, but with the strong commitment from the AfCFTA and the hard work of our partners, I am confident we will achieve our mission of connecting Africa with the most advanced digital trade infrastructure worldwide,” Schiener expressed.

Challenges in African Trade

Chido Munyati, head of Africa at the World Economic Forum, highlighted that inefficiencies in trade are a considerable challenge for African nations, which he believes can be addressed through digitization and blockchain technology. The reliance on paper documentation and the sluggish nature of border payments often extending to weeks are central issues that the Iota Foundation aims to tackle.

Africa's Growing Role in Cryptocurrency

Currently, it is estimated that over 75 million individuals in Africa are engaged in the cryptocurrency market by 2026, with a user adoption rate of 5.9%, according to Statista. The continent's total crypto revenue is anticipated to reach $5.1 billion by 2026.

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In Sub-Saharan Africa, stablecoins represent approximately 43% of total transaction volume, as reported by Chainalysis on October 2, with leading countries including Nigeria, South Africa, Ghana, Kenya, and Zambia.

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