Introduction

Burkina Faso, situated in a landlocked region of the western African nation has a developing economy blooming with new and significant changes driving growth and openness to innovation. The name Burkina Faso means ‘Land of Incorruptible People’ and it has continued to stand by it by being a small and tight economy gradually growing in the viable and the seemingly good directions. But the economy stands with a lot of challenges as well while on one hand its developing nature is significantly influencing the digital asset adoption. The economic instability includes potential inflation and a visible currency volatility. This drives the demand of stablecoins as a more reliable store of value. Lets find out more about the challenges and the breakthroughs taking shape in Burkina Faso’s economy.

The surge of peer-to-peer crypto payments Africa

Africa has seen a significant rise in peer-to-peer (P2P) crypto transactions in terms of volume and relativity to the regions around. Nigeria, among others, has been on the forefront of this change as it is driven by currency depreciation and high remittance costs. This trend will continue to grow in Africa as the digitalization of payments and mobile currency penetration is taking on the economy and more locally compliant and tailored solutions are emerging.

How P2P works in Africa;

1. Direct exchange

Users engage in direct crypto exchange with p2p platforms providing escrow services and securing crypto once both parties confirm the transaction. 

2. Local currency integration

P2P platforms provide diverse currency options according to the locally used currencies (e.g. Nigerian Naira, Ghanaian Cedi, etc) allowing users easier access to crypto in their own currencies. As access to banking services is limited, these options provide a good accessibility of crypto and asset procurement.

3. Multiple payment methods

On platforms like these, users can choose from a wide range of payment options like bank transfers, mobile money and other local platforms. This makes crypto accessible to a broader audience.

4. Escrow systems

These platforms hold crypto in escrow wallets releasing them to buyers and sellers when the transactions are confirmed, the mechanism is good for storing value and helps prevent fraud.

5. User driven market

This kind of setup makes the market flexible in a competitive market by providing payment methods and desired prices.

The rise of Stablecoin: Current usage and accessibility

Stablecoin payments are increasing in Burkina Faso as a positive response towards various economic challenges in the Western region of Africa. Challenges like currency volatility, unreasonable inflation and difficulty in the means available for cross border payments. While there isn’t widespread adoption of direct adoption in day to day transactions, bigger transactions and businesses dealings are moving rapidly towards digital assets.

Legal Status

Crypto currencies are not illegal to transact in Burkina Faso but there’s no current legislation on its usage and adoption. At the same time, the Central bank does have guidelines for cautionary usage. Crypto and digital assets have been established as viable facilitators of community trade and the need for regulations to prevent misuse exists.

Why are stablecoins attractive in the current state of the economy? 

• Stablecoins provide a hedge against volatility as they are pegged to the US Dollar and are not susceptible for depreciation on a regular basis unlike Africa’s currencies. 
• Stablecoins ease cross border payments and remittances by high speed and lower costs.
• They play an important role in E-commerce and International trade
• They also provide financial inclusion to the widespread unbanked population. 

While stablecoin usage is not that widespread in African regions like Nigeria where its still gaining traction, many platforms allow users in Burkina Faso to buy stablecoin and crypto easily facilitating the high adoption. They offer various funding methods which are used on a day to day basis. The conversion of West African CFA Franc to stablecoin and crypto is easy to achieve and Global solutions like Transfi are also coming into play providing their best conversion setups for the Burkina Faso community. 

Mitigating economic instability with stablecoin 

The lack of a clear regulatory framework for accommodating stablecoin and financial innovations remains a challenge in most of the African countries including Burkina Faso. However the growing demand for solutions for currency instability and inflation is giving an entry pass to stablecoins the economy along the line in these years. 

Stablecoins, particularly those pegged to the US Dollar offer a stable store of value and aid in helping individuals and businesses save their resources and protect their money from inflation and value depreciation. The search for stability in some sort of monetary form is what drives the adoption of stablecoins across the world and Burkina Faso is no different. 

Enhancing cross border transactions in Burkina Faso

As the landlocked location of Burkina Faso suggests, remittance flows and cross border solutions are crucial. Cross border transactions are often expensive, slow and need involvement with a multitude of regulators and intermediaries. Stablecoins offer a cheaper, faster and more transparent alternative; 

1. Remittances - stablecoins provide an easy way to send money home in instant settlements without any losses incurred.
2. Business to Business payments - Businesses engaged in international trade can easily hop on to stablecoin payments eliminating longer waiting times and achieving better liquidity management bypassing all inefficiencies of traditional banking and transfers. 

At TransFi, we support a number of industries and sectors. Are you a global company operating in Burkina Faso or a local business planning to expand globally? If you are looking for a reliable, compliant payment partner to do business with, TransFi is the right one for you, providing ease of stablecoin and crypto payments packaged with a lot of other resources for smooth finances for your business. 

Other than making every kind of business transactions easier, stablecoins provide great financial inclusion to the unbanked and also combat foreign exchange challenges surpassing the forex reserve limitations of the region. 

A boon to economies : Global access with Digital transformation  

As this pace of development accelerates, it becomes a crucial step to utilize the advancements that technology is providing. Stablecoins are one of those assets which have transformed the landscape far and wide and are bringing visible change in how transactions happen in the present day. 

Digital transformation has brought about connectivity in real time and the global access to vast amounts of resources, information and means to accelerate economies and operations both at wider and personal levels. This digital transformation has impacted almost every major industry like healthcare, agriculture, manufacturing, commerce, etc. financial sector has not remained untouched from this transformation. What technological interventions are doing currently is helping realize the potential of the economy and various industries that comprise it irrespective of size, category or location. 

With the countless possibilities, Africa, like the rest of the world is embracing digital assets and crypto and moving towards growth and development. 

Conclusion 

African countries are no strangers to the use of digital solutions for money transfers, nor to the rapid implementation of such technologies. It is often said that the pervasiveness of mobile telecommunication usage in Africa, enabled the continent to leapfrog many first-world countries. There is already an abundance of local mobile and e-payment platforms that have seized this as an opportunity to develop innovative ways to reduce the friction associated with transferring money across the continent. An example is Transfi, which has been used widely for crypto and digital asset transactions. The platform allows customers to send and receive money via digital assets, various currencies, cryptos, etc. 

Also read: Stablecoin Payments in South Africa: Bridging Crypto and Traditional Finance in Africa’s Tech Hub

Frequently asked questions (FAQs)

1. Which stablecoin is the most viable for businesses? 

USDT and USDC are still, by the majority, the most popular stablecoins, which are famous for their stability and liquidity. 

2. Is it legal to use stablecoins in business transactions? 

Yes, stablecoins are legal in the majority of the countries of the world, but it is necessary to check the laws and regulations of the local government before getting started. In Burkina Faso, the adoption is gradual and stablecoins are widely accepted for exchange and transactions while there are no particular regulations on these lines. 

3. What are the benefits of using stablecoins in cross-border payments and remittances in Burkina Faso? 

The adoption of stablecoins as a means of payment, instead of traditional bank transactions, not only eliminates the role of the intermediary banks but also cuts back the cost of the transaction and final settlement times at very low-cost rates.

4. What do I do to adopt stablecoins in my corporation in Burkina Faso? 

You can apply stablecoins as part of your business by having a suitable wallet, selecting a payment gateway such as TransFi, and educating employees and customers about their usage methods.

5. Why Are Global Businesses Turning to Stablecoins?

Overall, stablecoins have established themselves as growing and significant components of the global payment infrastructure, with expanding usage across transaction types and regions, pointing to their growing centrality in the international economic system.