Zimbabwe’s government is exploring the use of cryptocurrencies in legal payment services, with the hope of bettering its economy.
The use of bitcoin is not a new idea, but it has been gathering steam from businesses and government officials. When President Emerson Mnagangwa came into power in 2017, there was wide expectation of economic relief and the lifting of Western imposed sanctions. Fast forward today, and the COVID-19 pandemic has reversed the modest progress made, and sanctions remain, albeit due to limited improvements on the human rights front.
Brigadier Colonel Charles Wekwete, a permanent secretary and head of the e-government technology unit, explained the idea of adopting bitcoins while speaking at a Computer Society of Zimbabwe summit. He said authorities around the world are still trying to develop policies for crypto assets but the implications of adopting digital currency are still unclear.
This is in part because crypto assets are a “fundamental departure from previously known financial instruments,” he noted.
“There are also a lot of concerns around the cross-border movement of funds,” Wekwete said. Money laundering and illicit flow of funds are among the factors that have spurred Zimbabwean regulators, along with many others around the world, to think carefully about opening up to crypto.
“So government has put in place mechanism to try and gather views from various sectors of society in order to eventually formulate policies,” he said. “Sooner or later, government will make statements, but we have not gotten there yet. The consultative process is already underway,” he added.
The benefits of formally adopting bitcoin couldn’t be more stark. Bitcoin jumped past $67,000 for the first time to a new all-time high, part of a wider recent rally in the cryptocurrency sector.
The world’s largest digital coin by market value gained as much as 2.5% on Tuesday to $67,778, taking out the last record set on Oct. 20 at just below $67,000. The climb in cryptocurrencies overall has taken their combined value above $3 trillion.
Adoption of crypto in Africa has gained steam in the 12 months to September, according to Chainalysis. It is the third-fastest growing cypto economy in the world, as people favor digital coins that will aid them circumvent bank and exchange restrictions.
Zimbabwe ranked 61st for crypto adoption, the Chainalysis 2021 report found. In 2016, the country’s central bank directed institutions to halt processing transactions in digital currencies citing risks around illicit activity.
However, in late October, Zimbabwe’s finance Minister Mthuli Ncube said crypto was “unstoppable” noting 30% of the country’s youth had invested in digital assets. He also added that regulation was essential and noted that the country was working with investors to develop crypto-based exchange-traded funds.
The government of Zimbabwe has also accepted the digital economy framework as part of National Development Strategy 1, which it refers to as a means for connecting government and business efforts in addressing the developing notion of the digital economy.
Should the move succeed, Zimbabwe will join El Savador in the list of countries that have formally adopted bitcoin as legal tender. Despite the flood of criticism from the public internally and throughout the world, El Savador’s government remained adamant in its backing for bitcoin legislation.
So far the move has worked well.
El Salvador’s president Nayib Bukele announced last week that its bitcoin profits were helping develop a pet veterinarian and would help build 20 schools.