Whether Bitcoin would be a better option for the southern African state of Zimbabwe to adopt as an alternative method of payment or not has triggered an online discussion this past week.
It follows the news that Zimbabwe will soon print its own version of the U.S. dollar as its economy suffers a severe US dollar shortage.
On 4 May 2016, Governor John Mangudya of the Reserve Bank of Zimbabwe (RBZ) announced that the government will later – possibly this month - issue bonds with a total value backed by a US$200 million Africa Export Import Bank (AFREXIM) facility.
Africa needs alternative payments and investment currencies
Writing in a piece published on techzim.co.zw, L.S.M Kabweza writes:
“Bitcoin is notoriously volatile, but nowhere close to the unpredictable nature of Zimbabwe’s current government, perceived or real. The more important thing however is that reliance on Bitcoin helps with Zimbabwe’s trust problem. No one needs to trust the government to use a cryptocurrency like Bitcoin or to store their money in it. The crypto-currency takes most of the decision-making authority out of the hands of individuals leaving it to a good extent to the mathematics in machines.”
In a forum, a member, Kakmakr, commented on bitcointalk.org that as one of the countries in Africa with the poorest population and the greatest need for micro transactions, the decision by the Zimbabwean government “will push more people to use alternative methods of payment and alternative investment currencies to protect their wealth.” They cited the inroads that the mobile money service M-Pesa has made into Kenya and other African countries as an alternative to their reserve currency.
Another writer, Mokimarket, suggested that Zimbabwe could print these new notes “with Bitcoin private keys embedded in each note to add some intrinsic value to the notes.”
Can the Internet be an obstacle for Bitcoin in Africa?
It is, however, argued that Bitcoin is best used on the Internet, hence only the tech-savvy can store their wealth through the digital currency.
A voztata writes:
“Bitcoin would definitely be the better choice for Zimbabwe. But the problem is that it needs the internet and the internet connection is really poor there. An individual or a company would have to invest/donate to Zimbabwe so they could have better internet access and that would require a lot of funds and guts.”
But the internet doesn’t seem to be an obstacle. Figures by BuddeComm show that internet penetration in Zimbabwe stands at almost 50% as at thte end of 2015 – a good level for a typical African country.
Another writer on the forum Kprawn says the people can link SMSes to Bitcoin or send Bitcoin via emails through their phones.
“If these people are knowledgeable enough to use Mpesa then they would know how to use Bitcoin. There are also enough third-party services like Bitpesa to help them figure it out.”
Zimbabwe - Ideal destination for Bitcoin companies?
Zimbabwean lawyer Simba Machiridza wrote a white paper last year on the state of the preparedness of the country as an ideal destination for Bitcoin companies.
Bitmari founder, Sinclair Skinner, noted that Zimbabwe has a high literacy rate, high cellphone penetration, high mobile banking usage and most importantly willingness to adopt new economic systems, citing that a 10-year-old child in Zimbabwe knows more about forex than most adults in Europe and US.
However, no official statement has come from the government in this regard. Until the government is able to come up with a remedial fiscal action which would address these economic concerns, the online discussion will continue.