At the annual Digital Payments Conference held at the Meikles Hotel Zimbabwe on July 28, the Reserve Bank of Zimbabwe (RBZ) warned the country’s citizens against the various risks involved in using Bitcoin.
The central bank’s Senior Executive of the National Payment Systems department Josephat Mutepfa, told the event’s audience—which primarily consisted of financial startups, experts, and entrepreneurs—that despite the popularity of Bitcoin, the Reserve Bank of Zimbabwe discourages the use of Bitcoin. This is due to the lack of regulatory frameworks for exchanges and startups providing digital currency related financial services.
While economic benefits of using digital currencies such as Bitcoin are evident to the central bank, the organization believes that any type of unregulated alternatives must be approached with caution, even if it provides the unbanked an opportunity to regain financial control.
Mutepfa specifically identified some Bitcoin startups including Bitmari, a company which enables Zimbabweans to send money across other countries in Africa, at substantially lower costs by using Bitcoin.
Increase in Mobile Transactions
The concern of the Reserve Bank of Zimbabwe is justifiable, mainly because the government lacks the necessary information to fully understand and regulate digital currencies like Bitcoin.
According to various statistics however, the rapid growth of the Bitcoin industry and market in countries like Zimbabwe seems inevitable. A recent study released by the multi-billion dollar auditing company KPMG demonstrates an unprecedented level of development in the mobile payment space in Sub-Saharan Africa.
Since 2014, nearly 95% of Zimbabweans have used mobile money to pay utility bills and the mobile money account penetration rate in 2014 was estimated at 25%, which was higher than the bank account penetration rate in the country.
This major shift in trend from banking services to mobile payments demonstrates the financial issues that the majority of the Zimbabwean population struggle to deal with when using banking products and services.
To obtain a bank account, an individual must provide a list of documents and evidence of a stable fixed income, which many people in Zimbabwe fail to offer. Thus, bank services are limited to a closed group of members in the society. When this financial isolation occurs, naturally, Zimbabweans search for alternatives and one of the most easily obtainable and accessible financial payment method is Bitcoin.
The central bank’s discouragement of the use of Bitcoin due to the lack of regulatory frameworks for digital currencies can be observed as the government’s ignorance towards the unbanked population.