The world has had a new look at Bitcoin (BTC) since El Salvador made it its legal tender. Now, it’s Zimbabwe that seems to want to take the plunge – at least, if it were up to its finance minister. The latter is encouraging the country’s institutions to dive a little deeper into cryptocurrencies.
Bitcoin in Zimbabwe? A belated enlightenment!
On September 17, 2 weeks after his appointment as Zimbabwe’s finance minister, Professor Mthuli Ncube, urged his country to invest in crypto-currencies:
“Zimbabwe should invest in understanding innovations, and often central banks are too slow to invest in these technologies. But other countries are moving faster. If you look at the Swiss Central Bank, they are investing in Bitcoin and understanding it.”
Ncube was enamored by his recent visit to the DMCC CRYPTO CENTRE, an incubation center for cryptocurrencies and payment solutions in Dubai. The minister said he came across solutions that could reduce the cost of sending remittances from the diaspora, which is worth up to $90 million, according to the World Bank.
Some of the cryptosphere applauded the minister’s statement. Others, including FlexFinTx CEO Victor Mapunga, however, pointed to what they called a belated realization:
“We already have blockchain and crypto companies in Zimbabwe, such as FlexFinTx. Work with local players!”
FlexFinTx was founded in 2018 and is Africa’s largest decentralized digital identity network. It aims to increase access to financial services and healthcare, for over 400 million Africans.
Zimbabwe and cryptocurrencies: regaining trust
According to the CATO Institute, monthly inflation in Zimbabwe exceeded 50% in 2017. The annual rate reached 89.7% sextillion in November 2008. At that time, the country abandoned its currency, the Zimdollar (ZWL), and adopted the dollar.
Inflation caused a cash shortage, limiting the amount of money available for withdrawal from banks. Zimbabweans have lost confidence in the country’s monetary and financial systems and now prefer to control their own assets.
To address these issues, the minister has vowed to push the Reserve Bank of Zimbabwe (RBZ) to create a cryptocurrency division, which will help the country’s central bank better understand it.
However, crypto-currencies are not unanimously supported by the country’s authorities Senator Jopa Sayeyo is wary of the consequences of an adoption of crypto-currencies on the ZWL, without first solving the problem of manipulation of the exchange rate by banks:
“When banks stop manipulating the exchange rate, perhaps the Reserve Bank of Zimbabwe (RBZ) might consider cryptocurrencies. Otherwise, it will lead to a massive crash of the ZWL [Zimdollar].”
After El Salvador gave legal tender to Bitcoin, Ukraine also legalized cryptocurrencies. Crypto-currencies continue to gain favor with authorities in various countries. Will Zimbabwe dare to follow El Salvador’s example in order to permanently turn around the country’s economic and financial situation, this time betting on a deflationary currency?