Lesaka is looking to grow its cross-border payments business with plans to use its place as one of the main backers of South Africa’s first rand-based stablecoin for that purpose. The group also sees the association as a way to expand its broader offering across Africa.
Earlier in February, a group of prominent financial institutions — Luno, a Sanlam unit, EasyEquities and Lesaka — announced the creation of rand-backed stablecoin Zaru. The move is seen as another sign of the growing use and adoption of cryptocurrencies in the country.
A stablecoin is a cryptocurrency designed to maintain its value by pegging it to another asset, such as a fiat currency. The most common of these is the dollar. Examples of stablecoins include USD Coin and Tether. The other main peg for stablecoins is commodities such as gold or oil.
Lesaka CEO Lincoln Mali sees a big opportunity to make a mark in the lucrative cross-border payments market, an area in which legacy finance houses have traditionally been slow to respond with costly executions.
“We’re passionate about using technology to solve intractable problems. One of these is cross-border payments,” Mali said in an interview.
“Cross-border payments are fraught with so much complexity, inefficiency and uncertainty. What blockchain technology does is to enable us to leapfrog all of those challenges. To bring certainty, to bring cost-effectiveness and to bring security in that space.”
Blockchain, the technology that powers cryptocurrencies such as bitcoin, until recently has been regarded as fringe and associated with finance scams. But in recent years it has gained mainstream acceptance, driven largely by big fund managers such as BlackRock.
Being pegged to the rand gives a measure of certainty and stability, said Mali.
The collective is selling the fact that stablecoins can be traded at any time of day, 24 hours a day, seven days a week. While this is no different for normal fiat currency trading, which carries no office or business hours, the stock market and related legacy financial markets can be traded only when open.
“The partners we have give our merchants and others who want to partake in cross-border payments 24/7 settlement,” Mali said.
“It also enables us to connect the rand to global blockchain economies and supports financial inclusion,” he said.
“There’s still a lot to be done, but we’ve signalled that we have other disruptive and innovative things that we want to do that solve real problems in society.”
Lesaka has said a big part of its strategy is expansion on the African continent. So far, a large part of the progress has come down to acquisitions. The group’s R1.6bn purchase of financial technology operator Adumo in 2024 gave it a foothold in Namibia, Botswana, Zambia and Kenya, beyond South Africa.
The group has made a number of notable acquisitions locally, including Connect Group, Recharger and the still to be finalised takeover of Bank Zero.
Mali and his team are looking to extend this by earmarking a part of their war chest for deals in other African countries.
“We see other opportunities on the continent, so we are not restricting ourselves to mergers & acquisitions just in South Africa,” said Mali.
“That’s something we’ll be able to elaborate on in the quarters to come.”
