The southern African country of Zimbabwe seems to be paying close attention to increasing demand for crypto. Presently, the country whose economy has been taking steps towards recovery perceives Bitcoin investment as a possible avenue for growth.
With this in mind, the government of Zimbabwe is taking into consideration the use of Bitcoin (BTC) as a legal tender. Local news reports state that the government is looking at this as an option to harness the technology and meet its demand. To facilitate this, Zimbabwe’s government has been striving to regulate the entire sector.
The Cryptocurrency Market In Africa
According to reports by Cointelegraph, Africa’s cryptocurrency market grew by more than 1,200% between July 2020 and June 2021. Monthly cryptocurrency transfers under $10,000 (€8,500) to and from Africa have risen by about 55% during this time. This rise sent the total cryptocurrency revenue to a peak of $316 million in June. The countries showing the highest level of cryptocurrency penetration in the region are: Kenya, South Africa, Nigeria, and Tanzania.
Other cryptocurrency hotspots like South Africa and Zimbabwe aren’t far behind either. In fact, South Africa’s South African Reserve Bank, among other top financial regulators, released a policy paper.
This paper details recommendation on how to regulate cryptocurrency. Meanwhile, the retired Brigadier Colonel Charles Wekwete, the permanent secretary and head of the office of the president of Zimbabwe and cabinet’s e-government technology unit, confirmed that discussions with businesses to implement cryptocurrency are already underway.
Why Hasn’t Zimbabwe Already Made Bitcoin Its Official Currency?
As it stands, making cryptocurrency secure and stable enough to sustain the economy is the main reason why Zimbabwe is yet to make Bitcoin legal tender. Wekwete explains clearly that this move can result in the externalization of money, money laundering, and unregistered cross-border transfers. He emphasizes that this ill-gotten cash flow results in subsequent unlawful actions.
He also said that the authorities are trying to come up with regulations to protect the country’s financial future. With this, Zimbabwe is yet to make any major declarations because they are still in the consultation stage.
However, it is encouraging to know that Zimbabwe has implemented the digital economy framework in the National Development Strategy 1. Here, it points to the framework as a means for connecting government and business efforts.
Can a Country Run on a Crypto-Based Economy?
Countries legalizing the use of cryptocurrencies as official currencies is not a question of “if”, but “when’. The El Salvadoran government has proven that cryptocurrency, especially Bitcoin, can run a country’s economy. After being the first country worldwide to legalize Bitcoin as legal tender, El Salvador received some backlash. Nevertheless, Salvadoran President Nayib Bukele praised the policy’s success. In a tweet, Bukele said he will use Bitcoin proceeds to build 20 schools and a hospital in the country.
Africa has great potential to test out cryptocurrency. While it’s still too early to say how widely adopted cryptocurrency will become in the region, and whether Zimbabwe will be the first African currency to adopt a crypto-economy, this is definitely a topic that many governments are attentive to.