By Adesoji Solanke

Back in 2014, two blockchain pioneers set out to solve a problem confronting the early cryptocurrency ecosystem: the extreme price volatility of Bitcoin and the first generation of altcoins made them difficult to use for everyday transactions and impractical as a reliable medium of exchange. Their answer came from an experimental blockchain platform called BitShares, where a token known as BitUSD was designed to track the value of the US dollar.

Users could create the token by locking up the network’s native cryptocurrency, BitShares (BTS), as collateral inside a smart contract, with the idea that the system would maintain a dollar-equivalent value through overcollateralisation and market incentives. For a time, the model appeared to work. BitUSD became the world’s first stablecoin and circulated within a small but growing ecosystem of early cryptocurrency exchanges as a way for traders to move between assets without returning to the banking system.

But because BitUSD was backed by BitShares, sharp swings in the price of the underlying token undermined the mechanism intended to maintain the peg, and by 2018 the system entered forced settlement after becoming under-collateralised. The peg broke and the token gradually faded from relevance, joining a growing list of early attempts at digital dollars that proved more fragile than their designers expected. The idea, however, survived the failure. If anything, BitUSD demonstrated that the demand for a digital representation of the dollar inside financial networks was real, even if the first attempts to engineer it were not robust enough to sustain it.

Today, the stablecoin market is booming – especially in Africa.

According to a new report by BVNK, stablecoin supply has increased by more than 500% over the past five years, pushing the total market value above US$300 billion. The report also found that ownership is more widespread in low and middle-income economies (60%) than in high-income ones (45%), with Africa leading at 79%. Over the past 12 months, the continent has also recorded the fastest growth in stablecoin holdings, driven largely by activity in Nigeria and South Africa.

Data from Yellow Card points to the same trend across the continent. Stablecoins accounted for 43% of total cryptocurrency transaction volume in sub-Saharan Africa in 2024. Nigeria emerged as the largest market, recording nearly $22 billion in transactions between July 2023 and June 2024. South Africa, meanwhile, has seen stablecoins displace bitcoin as its most widely used digital asset, with volumes growing by around 50% month-on-month since October 2023.

Much of the uptake stems from long-standing frictions in how money moves across African markets.

In economies where access to hard currency is constrained, stablecoins are being used as an additional channel for holding and transferring dollar-denominated value. They are also reducing the cost and time associated with remittances and cross-border payments, allowing funds to move between individuals and businesses without passing through multiple settlement layers. For payment companies operating across several jurisdictions, they are being used as a treasury tool to move liquidity between markets without tying up working capital in prefunded accounts.

They are also appearing in the labour market, where African professionals working for international firms are receiving compensation directly in digital dollars, preserving the value of their earnings in volatile currency environments.

These use cases are also beginning to intersect with existing payment infrastructure across the continent. In East Africa especially, stablecoins are appearing alongside mobile money platforms, as infrastructure providers build on- and off-ramps between digital dollars and local currencies that allow them to move within the same payment workflows used for everyday transactions.

The uptake is also being supported by a regulatory environment that is gradually taking shape across the continent. Mauritius was among the early movers in establishing frameworks for digital asset businesses, while Kenya and Ghana have introduced regulatory regimes for Virtual Asset Service Providers. Uganda and South Africa are moving toward greater supervisory clarity, with regulators in many other markets also engaging directly with industry participants through roundtables and live demonstrations of how these systems operate in practice.

This is not to say there are not legitimate concerns around regulatory reporting, consumer protection, and the potential impact of widespread USD-denominated stablecoins on domestic monetary policy. However, the trajectory suggests that policymakers recognise stablecoins as an enduring feature of the financial landscape. The task now is to craft proportionate frameworks that manage these risks while allowing the technology to develop within the continent’s financial system.

In the near term, several developments are likely to determine the next phase of stablecoin adoption across the continent. Integration with wallets, mobile network operators and the emergence of local currency stablecoins, could deepen domestic use by building on existing payment habits. At the same time, consumer-facing innovation that removes technical complexity will matter; most users will not need to understand blockchains in order to benefit from them. Deeper integration with banks may prove to be the real inflection point, particularly as custody, liquidity provision and treasury services begin scaling stablecoin applications into areas such as trade finance and supply-chain payments. Whether the ecosystem matures into a cohesive network will also depend on interoperability between fintechs, banks and infrastructure providers rather than the development of fragmented systems.

Adesoji Solanke, Head of Fintech & Banks Investment Banking Origination, Absa CIB

By Abdul Yassim and Mosa Tshabalala

Before 2008, global banks operated through expansive cross-border networks, tiering markets into core and peripheral exposures and managing trade flows accordingly, but in the wake of the global financial crisis, regulators reassessed the risks embedded in those balance sheets, capital requirements tightened, and international banks began concentrating their activities closer to home. In many so-called frontier markets, they turned to regional partners to support their transactional and investment banking activities, relying on local balance sheets and compliance infrastructure to intermediate trade. In Africa, that meant deeper engagement with domestic and regional banks that could facilitate cross-border transactions on the continent.

Trade hubs became gateways into the continent, allowing local banks to intermediate trade for global partners with greater confidence, and for those partners the priorities were straightforward: certainty of payment, speed of settlement, and competitive pricing.

Those priorities still matter today, and whether they’re delivered in practice depends on how quickly capital moves through the transaction.

Take an everyday transaction: an order comes in, and raw materials, labour, production, and transport all have to be funded before a single payment is received. By the time goods cross a border, weeks may already have passed, and settlement can take longer still where processes are uneven, or payment terms extend across jurisdictions. If trade credit, supplier finance, or receivables discounting are not readily available, even modest delays begin to strain the balance sheet.

That has implications beyond the business itself, including for those financing and investing in it.

Supply chain finance therefore becomes pivotal to intra-African trade, particularly for foreign investors allocating capital into the region. By advancing funds against approved invoices and verified trade flows, it shortens the distance between shipment and payment and gives investors clearer visibility into how transactions perform over time. As that cycle becomes more consistent, capital can be committed at scale without demanding wide buffers for uncertainty.

However, despite an estimated supply chain finance market on the continent exceeding $60 billion, UNCTAD suggests that only between 7% and 25% of demand is currently met, and Afreximbank reports that just 18% of African banks’ SCF portfolios are directed toward intra-African trade. That imbalance means a significant share of cross-border trade operates without consistent, structured working capital support, and it is here that foreign investors eyeing opportunities on the continent can find their entry point. Backing Africa’s trade expansion does not require creating new demand; it requires financing trade that is already moving but under-served. And for that capital to scale comfortably, the financial infrastructure around intra-African trade has to become more coherent.

Regional trade becomes expensive to finance when too much of the transaction sits in separate systems that do not talk to each other. A buyer may know a supplier well, and a supplier may trust a buyer, but once a bank or insurer steps in, it often has to piece together the transaction from scattered documents and inconsistent settlement records, and the cost of that reconstruction shows up in pricing.

This is why it is important to develop stronger regional digital supply chain platforms. These are shared tools that bring buyers, suppliers, logistics providers, and financiers onto the same transactional record, linking confirmed orders, shipment updates and payment data in a way that can be accessed across borders. They reduce the need for each institution to independently reconstruct a deal from fragments, and instead allow financing decisions to rest on a verified record of what has actually been traded and settled.

But the effectiveness of regional platforms ultimately depends on the quality of the data flowing into them. UNCTAD research finds that businesses that use digital technologies such as enterprise resource planning (ERP) systems, electronic invoicing and integrated data platforms are better positioned to access SCF because they generate more consistent and transparent transaction records. African banks have also developed in-house digital SCF portals that allow their corporate clients to onboard suppliers and manage invoice finance programmes online. By automating processes that were previously manual and paper-heavy, these platforms have reduced administrative costs and made it commercially viable to include smaller suppliers who would once have been too expensive to serve.

The way risk is measured also needs to change. Much of trade-linked lending on the continent still leans heavily on fixed security, property and guarantees, assets that smaller firms either do not have or cannot pledge without choking their own operations. Transaction data provides a different basis for judgement: repeated orders, buyer payment behaviour, settlement timing, dispute frequency, the ordinary signals of whether a business performs. When lenders can rely on that record, funding can be structured around what the firm does rather than what it owns, and that is how SCF moves from being an instrument used by a few large anchor programmes to something that changes who can participate in regional trade.

When lenders can rely on that record, funding can be structured around what the business does rather than what it owns, and that is what allows capital to move more confidently into intra-African trade at scale.

Abdul Yassim, Head: Trade and Working Capital South Africa and Mosa Tshabalala, Head: Institutional Trade and DSI Sales, Absa CIB

By Abdul Yassim and Mosa Tshabalala

If one were to speak to African suppliers who trade across borders, many would say that doing business within the continent can feel riskier than exporting beyond it. Especially for small and medium-sized enterprises (SMEs), information on counterparties is not always easy to obtain, regional currencies can be volatile and difficult to hedge, forward markets offer little depth, and access to affordable finance is often limited at precisely the moment it is needed most. Financial institutions also sometimes price regional trade more cautiously than comparable transactions further afield, even though the markets sit closer together, and despite the clear opportunity to finance these supply chains, only a portion of the demand for capital is met.

In practical terms, this puts pressure on the supply chain. Take an everyday transaction: an order comes in, and raw materials, labour, production, and transport all have to be funded before a single payment is received. By the time goods cross a border, weeks may already have passed, and settlement can take longer still where processes are uneven or payment terms extend across jurisdictions. If trade credit, supplier finance, or receivables discounting are not readily available, even modest delays begin to strain the balance sheet.

This is why easier access to supply chain finance (SCF) is so important to expanding Africa’s regional trade agenda.

However, despite an estimated SCF market on the continent exceeding $60 billion (merely 2% of global volume), UNCTAD suggests that only between 7 and 25% of demand is currently met, and Afreximbank reports that just 18% of African banks’ SCF portfolios are directed toward intra-African trade.

When working capital is scarce and currency risk sits with the supplier, cross-border trade becomes a balance-sheet decision rather than a market opportunity. Smaller businesses begin to limit their exposure, prioritising domestic transactions where settlement is more predictable and informal credit can bridge short-term gaps, and pricing defensively where exchange-rate volatility threatens already thin margins. Over time, the result is a narrowing of participation, with only the most capitalised firms able to operate comfortably across borders.

There are practical solutions that can be implemented in the near term to make SCF more bankable. Regional trade becomes expensive to finance when too much of the transaction sits in separate systems that do not talk to each other. A buyer may know a supplier well, and a supplier may trust a buyer, but once a bank or insurer steps in, it often has to piece together the transaction from scattered documents and inconsistent settlement records, and the cost of that reconstruction shows up in pricing.

This is why it is important to develop stronger regional digital supply chain platforms. These are shared tools that bring buyers, suppliers, logistics providers, and financiers onto the same transactional record, linking confirmed orders, shipment updates and payment data in a way that can be accessed across borders. They reduce the need for each institution to independently reconstruct a deal from fragments and instead allow financing decisions to rest on a verified record of what has actually been traded and settled.

But the effectiveness of regional platforms ultimately depends on the quality of the data flowing into them. UNCTAD research finds that businesses that use digital technologies such as enterprise resource planning (ERP) systems, electronic invoicing and integrated data platforms are better positioned to access SCF because they generate more consistent and transparent transaction records.

African banks have also developed in-house digital SCF portals that allow their corporate clients to onboard suppliers and manage invoice finance programmes online. By automating processes that were previously manual and paper-heavy, these platforms have reduced administrative costs and made it commercially viable to include smaller suppliers who would once have been too expensive to serve.

The way risk is measured also needs to change. Much of trade-linked lending on the continent still leans heavily on fixed security, property and guarantees, assets that smaller firms either do not have or cannot pledge without choking their own operations. Transaction data provides a different basis for judgement: repeated orders, buyer payment behaviour, settlement timing, dispute frequency, the ordinary signals of whether a business performs. When lenders can rely on that record, funding can be structured around what the firm does rather than what it owns, and that is how SCF moves from being an instrument used by a few large anchor programmes to something that changes who can participate in regional trade.

When suppliers can access working capital against confirmed trade flows, entire value chains become more bankable, payment cycles become more predictable, and cross-border relationships become more durable because financing is tied directly to commercial activity rather than to fixed assets.

If the African Continental Free Trade Area is to translate into real commercial activity, this financial architecture has to grow with it. Trade agreements can open corridors, but it is the movement of working capital within value chains that determines whether those corridors carry consistent trade or sit largely idle.

Abdul Yassim, Head: Trade and Working Capital South Africa and Mosa Tshabalala, Head: Institutional Trade and DSI Sales, Absa CIB

By James Noble

Ahead of the Franchise Association of South Africa’s 2026 National Conference and Expo, James Noble, Sector Executive: Wholesale, Retail and Franchising at Absa Business Banking, underlines the importance of growing this sector to the economy of South Africa and the wider continent.

If franchise business owners want to scale up and stay ahead of the pack in their retail areas, they must embrace new technology and innovation, or risk being overtaken as the modes of doing business change globally and AI emerges as a critical tool to succeed.

While the franchise business sector already contributes R1 trillion to the South African economy, there’s optimism for even further growth. Those who succeed will be adaptable, open to data-driven decisions and willing to tailor their business towards a better user experience in an ever-changing trading environment. Being able to contribute towards reconfiguring established best practice when needed – often at a dizzying speed – will be a key driver of maintaining competitiveness, helping brands illustrate their resourcefulness and demonstrating they will not be left behind. A good example of this was during the Covid-19 pandemic when South Africa saw which retailers were quick off the mark to mobilise their same day grocery and retail home deliveries. It was abundantly clear which retailers dithered and were left behind. The early adapters improved their models and are still ahead of the pack. Those who came late to the party may have difficulty catching up.

It’s inevitable that AI capability will play a far more significant role in driving successful business going forward. Smart business owners know that loyalty programmes steer customer behaviour. To this end, AI is already starting to identify specific customer needs and spending patterns, and tailoring discount vouchers and loyalty points based on what these customers normally purchase. Using predictive demand capabilities, AI will streamline business by analysing past data to predict future orders, for example. Another way AI will contribute will be in solving the often-lengthy times taken for fast food deliveries, a big crunch point for many businesses.

Again, the innovators will be the ones that corner the market in their fields. For instance, we are already seeing the rise of dark kitchens here, where many fast-food outlets are clustered together in an unbranded location under an umbrella shell, so that home deliveries can reach customers faster and smarter. It’s a brilliant solution concept which works well. No one wants a cold takeout, delivered late because the outlet is all the way across town.

Self-service and high-tech cashier-less checkouts also have the potential to fly, but this will be limited to those who can afford this expensive technology.

While the notion exists that AI will deprive people of jobs, this could be balanced by more franchises being established. The FASA 2023 Franchise Survey, sponsored by Absa, indicates that within the sector, each new franchise business brings the potential of eight to 10 new jobs. Crucially, for every 14 direct jobs, seven indirect jobs are created in supply chains and support services. Many of these represent material prospects for economic empowerment for women, youth, black owned business and emerging markets in townships and rural communities.

Having supported South Africa’s franchise industry for more than three decades, Absa has developed a deep understanding of the evolving needs of both franchisors and franchisees. Its sector expertise connects with franchise businesses throughout their lifecycle – from new entrants to established brands looking to scale. Insights suggest as the mobile economy and models of financial inclusion expand in Africa, there’s greater scope for those who have been previously sidelined to participate in the market. For instance, there are more women as primary owners of the business as franchising creates new opportunities for them. In addition, women are coming forward to head up the franchisee councils within brands, so they’re at the forefront of representing the interests and concerns of franchisees.

The FASA data reflects growing confidence for penetration into underserved markets. Predictably, Gauteng still has the largest amount of franchise outlets at 41%, with 16% in the Western Cape, 12% in KwaZulu-Natal, and the other provinces with a combined 31%.

The data FASA has mined reveals that as of 2023 there were 68,463 franchisees operating across 727 franchise systems. There was a healthy 43% increase in franchisees operating franchise systems since 2019. Approximately half a million direct jobs were created, representing 4.7% of national employment.

It’s encouraging that according to FASA, 89% of franchisees achieve break even within the first year, up from 69% in 2019. That’s firm testimony to the positive business prospects franchising offers right now.

Franchise ownership by the previously disadvantaged increased from 20% in 2019 to 48% in 2023. South Africa can boast that some 88% of franchise systems are locally owned brands. Almost 40% of South African franchise brands have demonstrated their global competitiveness by operating outside South Africa. Their growth into Africa to markets like Botswana, Lesotho, eSwatini, Namibia, Mauritius has helped create employment opportunities outside our borders, with 13% expanding their reaches into the Middle East, United States, and United Kingdom.

The franchise sector has demonstrated a dogged resilience, weathering some tough economic challenges while maintaining its 15% contribution to GDP over the last couple of years.  Encouragingly, that 15% is growing, reflecting the power of collaboration between franchisors and franchisees, the strength of proven business models, and the effectiveness of knowledge transfer.

The longevity and sustainability of businesses in the franchise sector are also far greater than that of independent businesses. A solid illustration of that is that 80% of franchise businesses are successful beyond three years, whereas 80% of independent SMEs have failed in this period.

As at the start of 2026, the environment for South African SMEs has improved, driven by the lowest fuel costs in several years, more than 270 days without load shedding, the Rand trading at much stronger levels to the dollar, and interest rates dropping to their lowest since 2024. If these trends continue, and franchise owners harness the best new technology they can afford, the broad success of franchises in this decade – and their contribution to the national economy – should be assured.

James Noble, Sector Executive: Wholesale, Retail and Franchising at Absa Business Banking

By Chris Edwards

Many argue that the global financial crisis permanently changed the relationship between hedge funds and their prime brokers. Prior to 2008, South African equity managers were typically running relatively niche, domestically focused equity long-short or market-neutral strategies, whilst fixed income managers focused local exposure, largely centred on sovereign debt, often managed and financed in relative isolation. But the aftermath of 2008 forced managers to confront how closely counterparty strength and balance sheet resilience were tied to their ability to run those strategies.

The buy side diversified counterparty risk by moving to a multi-prime broker model, something that is all too familiar today, while advances in electronic trading and cross-asset modelling expanded the range of instruments that could be traded within a single portfolio, setting the stage for multi-asset strategies that now differentiate prime brokers in the market.

Managers are now able to invest more broadly within defined mandates that permit international exposure, with access to instruments across markets and asset classes that allow for far more diversified, globally integrated portfolios. For prime brokers, that has meant meeting those requirements in practice, from providing access to global markets and traded instruments to understanding the risk embedded in more complex underlying portfolios and structuring solutions that allow managers to implement these strategies effectively.

A significant amount of time and effort goes into developing multi-asset class margin models that assess portfolio risk across instruments, geographies, and asset classes. The objective is to provide fund managers with margin requirements that are both optimised and competitively priced, ensuring they are not unduly penalised through excessive collateral posting relative to the risk embedded in their portfolios. That requires looking at portfolio-level risk and the correlations that exist across asset classes, rather than treating exposures in isolation. By doing so, prime brokers ensure managers achieve the most efficient use of collateral possible, effectively maximising the value of what they post against the risks they are running.

That focus on portfolio-level risk and collateral efficiency has become even more important as regulatory requirements evolve in specific markets, South Africa being a clear example.

Local regulators are implementing reforms aligned with global initiatives to strengthen the regulation of Over-The-Counter (OTC) derivatives, most notably through the introduction of initial margin requirements for non-centrally cleared derivatives. This staged approach has had a penal effect on hedge funds that make active use of derivatives within their portfolios, materially increasing collateral requirements for instruments such as interest rate swaps and related derivatives. For funds with limited balance sheet capacity, those requirements can quickly become prohibitive relative to the capital they manage.

From a prime brokerage perspective, this is where platform capability and model sophistication matter, and some banks have moved quickly to adapt. Absa, for example, has invested heavily in developing solutions that offer managers alternative ways to meet these regulatory requirements, allowing them to collateralise exposures more efficiently. In some cases, that has been critical in enabling funds to remain viable.

This is not about circumventing regulation, but about interpreting it properly and adapting to it, finding workable solutions that sit within the rules while allowing managers to continue operating strategies that would otherwise struggle to be sustained. Recognising offsets and correlations across asset classes becomes a practical requirement for supporting multi-asset portfolios efficiently under modern regulatory regimes.

As portfolios become more complex, the way strategies are packaged and delivered has changed too.

The traditional fund structure is transforming with the growth of actively managed certificates, actively managed ETFs, and other delivery or access channels. Managers are therefore exploring alternative ways of deploying their strategies, and their choice of platform provider is being influenced by the ability to support multiple structures at once. That includes supporting traditional fund infrastructure alongside AMCs, segregated or separately managed accounts, and other tailored vehicles.

With strategies expressed through a broader set of channels, managers are looking for prime brokers that can meet those requirements in parallel rather than forcing trade-offs between them. What this means is that prime brokers will need to evolve to support and deliver services beyond liquidity and execution if they are to support the growing call for diversified, multi-asset investment strategies.

Chris Edwards, Managing Director and Head of the Prime Services, and the Index & Structured Solutions businesses at Absa Bank