Although many believe that crypto adoption in Africa is still in its infancy, many African countries, including Zimbabwe, have been greatly welcoming this technology. According to Statista, the number of Zimbabwean crypto users is expected to reach 253.7k by 2025, accounting for a market value of about $3.4 million.
In another place, Nairametrics ranked the country among the top five African countries leading in crypto adoption. This widespread popularity of digital currencies among the country’s population is among the reasons why the government has been drawn to regulate the industry to ensure users interact securely.
Just recently, in May this year, the government established a multi-stakeholder committee that was to help it understand the local crypto ecosystem more. In an industry where things can change so suddenly, staying informed about such trends is important. It is also good for any investor to regularly examine Bitcoin price prediction by different experts to help make informed investment decisions. In this article, we will look at the industry in Zimbabwe and share some fascinating facts that will get you ahead.
The actions of the government
As mentioned earlier, the Zimbabwean government established a committee, the National Risk Assessment Coordination Committee (NRACC), whose aim was to examine the nature of the country’s crypto ecosystem. In a bid to ensure that Zimbabweans trade in a secure environment, NRACC was to assess crypto-associated risks and propose a regulatory framework for the industry.
Well, according to Nick Mangwana, the Permanent Secretary for Information and Publicity, the decision was inspired by the desire to get a deeper understanding of the country’s virtual assets infrastructure. The permanent secretary added that it was necessary to assess any potential risks as crypto has a high level of anonymity and decentralization. So, the goal was not really to prevent any further innovations in this industry but to ensure security and integrity.
Once the government has identified what the local crypto looks like, Mangwana confirmed that they would come up with an appropriate framework to cater to the country’s specific needs.
The launch of a virtual token
In May last year, Zimbabwe launched a gold-backed digital currency to enable P2P and P2B transactions and help the country’s currency, which continues to lose ground against global currencies. As it encouraged individual and corporate entities to use the currency, the Reserve Bank of Zimbabwe confirmed that those holding physical gold coins could be able to convert or exchange them into gold-backed digital tokens at their own discretion.
This move came after other African nations like Nigeria and South Africa had adopted digital currencies. The idea was to use the gold-backed digital currency alongside the dollar and bond notes as a legal tender and store of value. By April 2023, the country had reserves of about 350kgs, which were valued at $22.8 million, with intentions of building them to $100m.
After successfully implementing the digital currency, the government announced in October 2023 that it could be used as a payment method. Early this year, Zimbabwe launched a new gold-backed currency, ZiG, after struggling with serious inflation issues for more than a decade.
Existing challenges and opportunities
Although crypto seems generally welcomed in the country, the process has not been without challenges. Let’s take the banking sector as an example. Fanwell Mutogo, the CEO of the Bankers Association of Zimbabwe, highlighted in a statement that the banking sector was not yet able to embrace crypto fully. He added that the technology was still in its infancy and needed more research.
The 2023 move by the government to adopt digital currencies might trigger their rapid assimilation in this sector. Some reports show that John Mushayavanhu, the governor of RBZ, had thought of having crypto as a local tender before going for ZiG in April.
Meanwhile, financial analyst Ranga Makwata suggested that Zimbabwe’s current financial ecosystem provided a good ground for the widespread adoption of crypto as it struggled with centrally managed currencies. He added that the growing need for effective remittances might play a huge role in the spread of this intriguing technology. Plus, the existing tech-savvy youthful population could also encourage this trend.
Even though these opportunities exist, Makwata insisted that regulatory uncertainty and low levels of crypto information might challenge full-scale adoption. Responding to the government’s efforts, the financial analyst suggested that having a framework that offers legal certainty, protects consumers and gives guidance on the proper use of virtual assets could help the country maximumly benefit from crypto.
Parting shot
A question that you could be asking yourself is whether crypto will become the future of Zimbabwe. Especially after the country released a digital token last year, there has been much anticipation and anxiety about how the future may look like.
This comes at a time when this South African country is working hard to stabilize its economy which has been experiencing hyperinflationary issues for several years now. And as the government has been trying hard to regulate digital currencies, will crypto be a convenient alternative to help it lower inflation? Let us keep a close watch.
