Tether, the world’s largest stablecoin provider, is strengthening its presence in Africa as part of its broader strategy to expand in emerging markets. This week, Tether led a $10 million seed funding round for Dubai-based fintech Mansa, a platform that facilitates instant settlement for payment companies, mainly in Africa. The investment marks a continuation of Tether ’s increasing interest in the African market as stablecoins gain traction for cross-border transactions.

Mansa offers liquidity via a revolving line of credit in stablecoins, enabling payment companies to settle transactions and fund customer accounts instantly. The $10 million seed round included both equity and debt financing, with Tether leading the $3 million equity portion. Other investors included Faculty Group, Octerra Capital, Polymorphic Capital, and Trive Digital. The remaining $7 million came from liquidity providers such as decentralized finance (DeFi) platforms, quant funds, family offices, and hedge funds.

The startup, co-founded by CEO Mouloukou Sanoh and COO Nkiru Uwaje, aims to tackle cash flow constraints for payment firms while reducing transaction costs. Sanoh, a former investor at web3 VC firm Adaverse, and Uwaje, who led blockchain strategy at Dell and worked at SWIFT, bring significant expertise in finance and technology. Mansa claims to underwrite loans based on real-time transaction data rather than collateral, offering an alternative to traditional lenders.

Cross-border payments remain a challenge in emerging markets, with liquidity shortages leading to settlement delays and high operational costs. With global remittance fees averaging 6.5%, inefficiencies in traditional banking systems could cost businesses billions annually. Mansa hopes to address these issues through its embedded pre-funding solutions, completing due diligence within a month and providing liquidity at scale.

Since its launch six months ago, Mansa has processed nearly $31 million in transactions, with volumes surging from $1.6 million in August 2023 to $11 million in January 2024. The company expects to reach a $1 billion total payment volume (TPV) run rate by the end of the year.

Tether’s Growing Influence in Africa

Tether ’s investment in Mansa aligns with its broader push into the African financial ecosystem. The stablecoin provider, which holds 70% of the global stablecoin market by trading volume, has been deepening its footprint in Africa through collaborations and strategic partnerships. In a move reflecting its growing commitment to the continent, Tether recently signed a Memorandum of Understanding (MoU) with the government of Guinea to explore blockchain and peer-to-peer technologies. The agreement aims to foster digital transformation, promote financial inclusion, and support blockchain education initiatives.

Tether CEO Paolo Ardoino emphasized the importance of Africa in the company’s strategy, stating, “We recognize Africa as a pivotal player in the cryptocurrency and stablecoin market. Our collaboration with Mansa and other initiatives across the continent underscore our commitment to financial innovation.”

The MoU with Guinea aims to introduce blockchain education programs and develop digital infrastructure in partnership with the Cité des Sciences et de l’Innovation de Guinée (CSIG). The initiative is expected to strengthen Guinea’s digital economy by facilitating knowledge transfer, skill-building, and the adoption of blockchain technology.

Despite its growing influence, Tether faces regulatory challenges, particularly in Western markets. Its USDT stablecoin was recently delisted from European platforms due to non-compliance with the EU’s Markets in Crypto-Assets (MiCA) regulations. The regulatory landscape in the US is also posing new hurdles for Tether. A proposed stablecoin bill could bring companies valued at over $10 billion under stricter federal supervision, potentially impacting Tether’s operations. Questions around the company’s lack of an independent audit also continue to surface, raising concerns about transparency.

Mansa’s co-founders believe Tether’s USDT is well-positioned to dominate stablecoin usage in emerging markets due to its accessibility and market share. 

Tether ’s growing African presence reflects broader trends in digital payments, as stablecoins become an integral part of financial infrastructure in regions with limited banking access. While regulatory scrutiny remains a challenge, stablecoins like USDT are increasingly being used for remittances, trade settlements, and financial inclusion.