Will crypto pull Zimbabwe out of its cash crisis?

17 Sep, 2018
by Arthur Sillers
Will crypto pull Zimbabwe out of its cash crisis?

As of late, a number of crypto commentators have reportedly pointed to Africa as a potential growth sector for investors in blockchain technology, and Zimbabwe’s new finance minister has announced that his new plan for moving the country through its particular fiscal problems is centered around cryptocurrency, according to IT Web Africa.

Zimbabwe has been going through a visible monetary crisis for the past two decades, having phased out their native currency around 2008 during a period of 89 septillion percent inflation, where a 100 trillion Zimbabwe dollar bill was worth about 40 US cents.

Citizens of Zimbabwe uses a number of different foreign currencies, in particular the US Dollar . As a result, there is an overall cash scarcity, with low bank-withdrawal limits and black markets for cash.

The country’s liquidity crisis in extends to the government itself, who, in order to fund official activities have over issued ‘Treasury Bills,’ creating a debt which compounds with Zimbabwe’s citizenry having low access to their own funds.

In order to move forward,Mthuli Ncube , the newly appointed finance minister, is pointing to starting a 'cryptocurrency unit' to orient the government’s investments into digital currency.

This goes against explicit statements by Reserve Bank of Zimbabwe (RBZ) who remain opposed to cryptocurrency because of the difficulty in regulating it, and concerns over its use for illegal activities.

Either way, the economy in Zimbabwe is 96% cashless, with most citizens preferring to use alternative payment platforms hosted on the internet like EcoCash and OneMoney. The government is clearly not collecting taxes on these exchanges, and people are so unable to access their legal tender that often times they resort to the black market to purchase cash with foreign currencies.

Zimbabwe has a unique monetary problem to solve, and simply lacks a legitimate, working, payment infrastructure. Cryptocurrency could prove a viable option to allow the government to collect tax revenue, and allow citizens to pay for goods and services without relying on foreign banks.

The corollary to this is that if cryptocurrency developers rise to the occasion, it could go a long way in developing interest in state-backed cryptocurrencies in Zimbabwe, Africa, and globally.

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