Local Currency Stablecoins and Global Impact
October 18 2024
by Victoria Calmon
Panel at Celo Gather Africa in Nairobi, featuring Markus Franke, CEO at Mento Labs, Jessica Gaubert, co-founder of Haraka, Derrick Kisa, co-founder of Clixpesa and moderated by Cyndie Kamau, Developer Relations at Celo Africa DAO.
Jessica: I’m Jessica, co-founder of Haraka, where I’m currently leading operations. Haraka is a community credit protocol connecting global crypto investors to micro-entrepreneurs in emerging markets who need capital to grow their businesses. We provide loans in local stablecoins, like the Celo Kenya Shilling (cKES), and use social reputation for underwriting.
Markus: I’m Markus, working at Mento Labs, the developer team behind Mento. Mento is a platform providing stablecoins in both global and local currencies, including the Celo Kenya Shilling stablecoin (cKES), which has been recently launched. We’re building solutions for communities around as lending, saving, on-chain FX, swapping infra for wallets, and on/off-ramping. I’m looking forward to discussing how we can unlock more community use cases with these technological solutions.
Derrick "Kachi": I’m Derrick Kisa, but everyone in Kenya calls me Kachi. I’m the co-founder of Clixpesa. We’re building a simplified wallet to onboard users, particularly community groups like Chamas, into Web3. We’re using these groups as a distribution channel for education and adoption.
Cyndie: Let’s start with you, Markus. Since this panel is about local currency stablecoins, can you give us a brief history of how you started with the concept of local currency stablecoins, moving from global ones like cUSD to the cKES?
Markus: Sure! Most of you are familiar with dollar-based stablecoins, like Tether’s USDt, and Mento’s cUSD. These are accessible globally, and 99% of the stablecoin market today is dollar-based. While dollar stablecoins are useful, especially for saving in countries where the local currency looses value against the dollar, local currency stablecoins are essential for credit access, as most entrepreneurs earn and pay in their local currencies. That’s why we launched cKES in Kenya and want to expand further, as entrepreneurs prefer to repay loans in their local currencies to avoid exchange rate volatility.
Cyndie: Jessica, since you provide loans, how has cKES helped Haraka in increasing loan accessibility?
Jessica: It’s been crucial. Our users are often people who’ve never had access to credit before. Introducing loans in USD adds a layer of complexity—they aren’t familiar with it, and currency volatility can make repaying loans unfair. Using local stablecoins like cKES simplifies everything. It feels like business as usual for them, and they don’t even need to know it’s powered by blockchain technology, which removes many barriers.
Cyndie: Kachi, your team at Clixpesa is building on the concept of Chamas (informal savings groups). How do you integrate local currency stablecoins into this existing community model?
Kachi: Great question! We noticed that while crypto wallets exist, they were too technical for our community. Chamas are a financial model people already understand, so we used this as a teaching platform. Initially, we used cUSD, but people found it confusing due to the exchange rate fluctuations. Introducing cKES simplified everything. They now see the same value in their Chama records reflected in their Clixpesa wallet.
Cyndie: How do you introduce crypto concepts to people in a way they can understand and trust?
Jessica: We don’t really focus on explaining crypto. Just like people don’t need to understand how email works to send a message, our users don’t need to know how crypto works. They care about the benefits like getting a loan or saving money. As they use the platform, they learn more gradually, but we avoid overwhelming them upfront.
Markus: Exactly. Most people don’t understand the technology behind mobile money or banking either, but they trust it because it works. That’s the goal with Celo, creating a system that’s easy to use and transparent. The technology is open source, so builders can explore it if they want, but users don’t need to.
Kachi: We’ve found the same. When we focus on the value—like transparency in managing Chamas—people are more interested. For example, when we introduced cKES, one of our users asked what it was. We explained that it’s the same as Kenya Shillings, and when they saw they could withdraw it to M-Pesa, that built trust.
Cyndie: Markus, what’s your vision for cKES in Kenya’s DeFi ecosystem?
Markus: The vision is to make stablecoins as accessible as mobile money but with lower costs. Eventually, users will be able to use cKES for everything—from sending money to family, getting loans and building businesses, swapping into dollar-stablecoins. The Mento platform is open-source and accessible to projects across Africa, enabling easy payments and cross-border transactions.
Cyndie: Are there plans to expand to other African countries?
Markus: Yes! The Mento Community is looking at Ghana next, with a Ghanaian Cedi stablecoin, and also others like the South African Rand are in the pipeline. The long-term vision is to offer a stablecoin for every African country, making it easy to send money across borders at low cost.
Cyndie: Jessica, what’s next for Haraka?
Jessica: We’re focusing on establishing ourselves in Kenya with strong partners, but we’re launching in Ghana next month with the Grameen Foundation. They’re the OG of microfinance, so it’s exciting to bring crypto into their first project.
Cyndie: Kachi, what’s Clixpesa’s roadmap?
Kachi: We’re focused on launching our app next year and expanding within the East African Community. We hope the Mento Community will vote to bring local currency stablecoins to Uganda and Tanzania soon, as this model works well across the region.
Cyndie : Thank you, Jessica, Markus, and Kachi, for the insightful discussion. Thank you to our audience, and we look forward to seeing the progress of local currency stablecoins across Africa!
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