Zimbabwe races to launch CBDC

Published on:

  • The country’s central bank launched a survey to garner opinions on the feasibility of a CBDC
  • The Reserve Bank of Zimbabwe opened an online consultation survey on CBDC
  • The country has created a regulatory sandbox for Fintech developers to test their products under the supervision of the Reserve Bank of Zimbabwe

Zimbabwe is picking up the pace in its efforts to launch a Central Bank Digital Currency (CBDC). After commissioning the tertiary institution the Harare Institute of technology to work on the practical aspects of the CBDC, the country’s central bank launched a survey to garner opinions on the feasibility of a CBDC. The country’s currency, the Zimbabwean dollar, however, has struggled in the 4 years since its reintroduction. Zimbabwe also has a ban on cryptocurrency trading.

Zimbabwe sees CBDC as a solution to the financial inclusion problem the country faces. With a large rural population access to financial services for the majority has been complicated at best. The country has made some strides through mobile money however the relationship with the country’s largest mobile money provider Ecocash hasn’t always been rosy.

The curious case of the Zimbabwean dollar

In earnest, the Zimbabwean dollar has struggled since the late 1990s. Through the 2000s the country broke modern-day inflation records despite various attempts at stabilising the currency. The ultimate problem was the wanton printing of money for government expenditure which caused chronic devaluation.

In 2009 the country abandoned its currency for the US dollar. The Zimbabwean dollar had plummeted to 1:45 quadrillion (12 zeroes) with the US dollar while inflation was a mind-blowing 231 000 000% (two hundred and 31 million percent). The US dollar stabilised and even breathed life into the economy. It wasn’t long before the government felt the pressure of not controlling the money supply and introduced Zimbabwean money backed by US dollars at parity in 2014. Known as bond notes the notes increased the money supply over the next 4 years. The parity illusion eventually became unmanageable in 2019 and the Bond notes were given full currency status as a second coming of the Zimbabwean dollar.

At reintroduction, in February 2019 the Zimbabwean dollar was valued at 1 US dollar on the official currency market. However, a parallel market had already emerged valuing 1 US dollar at 4 Zimbabwean dollars. At the time of writing a US dollar now fetches a little over 900 Zimbabwean dollars on the official market and 1100 Zimbabwean dollars on the parallel market.

Zimbabwe’s regulatory stance on crypto

Zimbabwe like many countries was caught unaware of the popularity of cryptocurrency. The country had a vibrant ecosystem which even included a cryptocurrency exchange, Golix. Cryptocurrency gave Zimbabweans an outlet to avoid the country’s tight exchange control regulations.

The law came crashing down on the cryptocurrency ecosystem in Zimbabwe in 2018. The RBZ interpreted the financial law in the country clearly stating that crypto operators were unregulated in the country. It further spelt out that all Banks could not facilitate activities related to cryptocurrency. Amongst the reasons cited was a desire to protect citizens from the threats posed by unscrupulous characters in the crypto space.

Since then the country has created a regulatory sandbox for Fintech developers to test their products under the supervision of the Reserve Bank of Zimbabwe.


Through the years the authorities in Zimbabwe have tried various mechanisms to slow the currencies decline. None have worked. With CBDCs operating via blockchain they offer the Zimbabwean government something they have not had before, complete control of the money.

The country maintains ridiculously low cash-to-total money supply ratios forcing people to transact through banking channels and mobile money. Cash is favoured by users because it is hard to control. Zimbabwe has several times clamped down on mobile money to curb the parallel market for foreign currency. CBDC programmability would massively play in their favour here.

Zimbabweans excited about cryptocurrency

All that has passed has not discouraged Zimbabweans from showing interest in cryptocurrency. Zimbabwe has an estimated cryptocurrency adoption rate of 1.4% and this is likely higher.

A group of developers also launched a wholly Zimbabwean cryptocurrency Zimbocash (ZASH). Zimbocash is a non-inflationary cryptocurrency that was specifically designed to combat the inflationary problems of the Zimbabwean dollar. While the project has not enjoyed a smooth path they have continued to engage with the authorities in an attempt to allow the trading of foreign cryptocurrencies in the country.

Is CBDC the answer for Zimbabwe

The Zimbabwean government believes CBDC is the answer to multiple problems they face. Zimbabwe has an impressive financial inclusion rate of 83% https://www.devere-zimbabwe.co.zw/news/Boost-to-financial-inclusion-in-Zimbabwe, largely spurred by mobile money. Internet penetration in the country is estimated at only 29.3%. For this reason, most academics argue that the country should pursue a CBDC that can work offline.

Digital currency is certainly capable of addressing challenges with financial inclusion. El Salvador is a testament to how well this can work. The central American nation nearly doubled its financial inclusion rate in just a year after adopting Bitcoin as a legal tender.

They may not say it in plain language but it’s easy to see how the ability to track, trace and even control the flow of money would also be of use to the Zimbabwean government. The Zimbabwean government has struggled to control all parts of the economy and it has shown up in the valuation of the local currency. Parallels can be drawn between Zimbabwe and the first African CBDC to launch a CBDC, Nigeria.

Reserve Bank of Zimbabwe consumer CBDC survey

The Reserve Bank of Zimbabwe opened an online consultation survey on CBDC. The survey asks questions about attitudes towards blockchain, digital currency and CBDC in particular. The RBZ does not have a history of consulting before embarking on policy so this is noteworthy. While close neighbour South Africa has chosen the fast-follower approach to CBDC, Zimbabwe seems to be in a rush to get there.

What Zimbabwe can learn from the eNaira

Although the eNaira is rated as the most widely used CBDC of the six that exist so far, it has suffered a poor adoption rate. As few as 0.5% of Nigerians have eNaira wallets while the cryptocurrency adoption rate in the country is around 12%.

Like Nigeria, Zimbabwe has a troubled currency. Like Nigeria, Zimbabwe has a ban on cryptocurrency. While a CBDC can offer many advantages over the domestic currency unit, it also has the possibility of significant drawbacks. At least from the user’s point of view. Furthermore, the CBDC would only be expected to fair as well as the domestic currency. For Zimbabwe that is dismal.


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Kudzai G Changunda
Kudzai G Changundahttp://www.about.me/kgchangunda
Finance guy with a considerable interest in the adoption of web 3.0 technologies in the financial landscape. Both technology and regulation focused but, of course, people first.