In a pretexted bid to bring an end to the nation’s perennial nightmarish currency woes, government is allegedly working on a secret plan to introduce a digital Zimbabwe dollar, as soon as a new currency it has already printed and said to be hiding, is rolled out by around September this year, Spotlight Zimbabwe, has been told.
High level officials in the ministry of finance and at the Reserve Bank of Zimbabwe (RBZ), this week said the mooted Zimbabwe digital dollar is reportedly the brainchild of finance minister, Mthuli Ncube, who is thought to be having the backing of numerous financial technology firms from abroad for the massive project, which will inevitably compel all citizens to use digital wallets, as President Emmerson Mnangagwa’s administration, slowly but surely pushes for the use of cryptocurrencies and virtual cash in the economy.
A cryptocurrency is a digital or virtual currency that uses cryptography for security, while digital wallets are a software-based system for making e-commerce transactions through computers, tablets or smartphones. In general, bank accounts of individual users are linked with their digital wallet, which can store complete user information including credentials, transaction history and personal details.
As first revealed by this publication on 14 December 2018, Mnangagwa’s regime is warehousing a new Zimbabwe currency at a classified location, which was reportedly printed by the Chinese government in return for allowing Beijing unperturbed access to the country’s diamonds and oil drilling rights. China has also been contracted to construct a new opulent capital city in Mount Hampden, under the same deal. We reported that the new money was expected to be launched in early 2020, to repeal and replace the then surrogate currency of bond notes, before they were renamed to RTGS dollars together with all forms of electronic money by the central bank last month. The RTGS dollar, derives its name from the country’s interbank online platform, Real Time Gross Settlement.
Former finance minister, Tendai Biti, blew the whistle about the imminent launch of the new currency days before RBZ chief, John Panonetsa Mangudya, announced his monetary policy statement in February, but the authorities denied the story and existence of the new local currency, only to make a tacit admission through Ncube that a local currency was only six months away, and in the meantime merging bond notes and mobile money into the current RTGS regime.
Spotlight Zimbabwe, has it on good authority that there had been a policy warfare in recent times in government between the finance ministry and RBZ over whether or not to introduce a new currency, and the idea of RTGS dollars, which ended up roping in Mnangagwa’s office for final policy direction. Ncube desired to lay the ground for the country’s own cryptocurrency through the experiment of RTGS dollars, while Mangudya allegedly planned to announce a new currency during his monetary policy pronouncement, we have gathered.
Within a fortnight of his appointment as minister in September 2018, Ncube started hinting about the digital Zimbabwe dollar, when he openly called for the country to invest in cryptocurrencies, as a measure to assist in solving the economy’s cash crunch.
“The RTGS dollars are actually a trail run for the digital Zimbabwe dollar,” said a senior official with the finance ministry. “I can confirm to you that our country is going to launch a digital dollar, that will operate concurrently with a new currency expected to circulate in September. It’s all being done in secret and two fintech companies (names supplied) from abroad are ready to render their services. FM (finance minister Ncube) wants the central bank to establish a cryptocurrency division for this purpose, and plans are at an advanced stage.”
Another long serving civil servant in the same ministry said government has been advised not to completely remove bank notes from the system to avoid resistance and public protest, if they want the digital dollar to be a success, that is why a new local currency is coming in a few months from now, as a precursor to the digital Zimbabwe dollar.
“It’s a delicate matter. People are not fools and they prefer physical notes to virtual money. Even in Europe and America there is resistance for digital currencies from the general public. In our case, they have decided to first bring in the new currency of bank notes, then immediately after that bring in the digital Zimbabwe dollar. Noone will be forced into accepting it, but people will eventually fall for it due to convenience. We shall all be using it, and before you know it the bank notes will be gone without much notice. That’s how it’s done.”
RBZ sources said a team of experts from the central bank and ministry of finance has been tasked with coming up with a legal framework for the digital dollar, likely to be called E-Zollar.
“The new Zimbawe digital dollar or E-Zollar it’s likely name, will seek to emulate the E-Ora in South Africa, which was tested in 2018 but unlike E-Ora, which is for a small community ours will be national,” the sources said. “A legal framework for the provision of the digital dollar is being worked out, such that it is adopted as legal tender and the RBZ can have regulatory powers over it.”
The E-Ora is from South Africa’s predominantly white community of Orania, located along the Orange River in the Karoo region of the Northern Cape province. Pegged to the South African rand, the digital currency is issued by the Oranian Chamber of Commerce, and is meant for exclusive use in Orania, a town of around 1600 people.
The Canadian city of Calgary has also followed suit, and launched it’s own digital currency known as the Calgary Digital Dollar, which will be used exclusively in the City of Calgary located in Alberta Province alongside the federal currency, the Canadian dollar.
According to RBZ digital transactions, underpinned by mobile money, accounted for over 90% of the US$97.5 billion in total value transactions for Zimbabwe in 2017 alone.