ZIMBABWE’S central bank is treading carefully on the introduction of a digital currency, even as other African economies accelerate efforts to embrace new forms of money.
Digital currencies exist entirely online, without physical coins or notes. They include cryptocurrencies such as Bitcoin, which operate independently, and central bank digital currencies (CBDCs), which are controlled by states.
Speaking during a high-level debate organised by Friedrich Ebert Stiftung and the Zimbabwe Economic Society recently, Reserve Bank of Zimbabwe (RBZ) deputy director of economic research William Kavila said the central bank was moving cautiously but deliberately.
“We don’t want to be left behind,” Kavila said.
The debate ran under the theme “Digital Currency in Zimbabwe: Towards an Upper Middle Economy”.
“This is something that we are considering very, very cautiously.
“And we actually established a section of the bank dealing with that, which is led by deputy governor Dr Innocent Matshe, who is very much interested in these things.
“We are not just sitting back, but there is something going on right now. There is actually a roadmap on that particular issue of cryptocurrencies.”
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Kavila stressed the need to create an enabling environment for a digital currency in Zimbabwe.
“Right now, we are talking about a dedollarisation roadmap where we want to build reserves, adequate import cover, ensure economic stability, and build confidence of our people,” he added.
Globally, digital currencies are spreading fast. El Salvador and the Central African Republic became the first countries to adopt Bitcoin as legal tender in 2021 and 2022, respectively. Since then, Nigeria has launched the e-Naira, while Ghana is preparing to roll out the e-Cedi.
By contrast, Zimbabwe and countries such as South Africa — the region’s largest economy by GDP — remain in the research phase, according to the International Monetary Fund.
The RBZ has in the past flagged risks. In 2018, it warned banks they were unprepared to manage digital currencies. Authorities remain anxious to restore confidence after years of turbulence, beginning with the collapse of the Zimbabwe dollar in 2008. That episode ushered in the US dollar, followed later by bond notes, RTGS, and most recently, ZiG. Each transition eroded trust. Civil society leaders are equally cautious.
Judith Kaulem, executive director of the Poverty Reduction Forum Trust, warned gaps in infrastructure and services could make digital currencies exclusionary.
“It might actually deepen the social and class divide, the rural and urban divide,” she said.
“It will lock out rural folks, it will lock out women and children.
“Right now in Zimbabwe, even in urban areas, we have power outages when you are in the process of making the transaction online, and there is no power.
“Imagine the heart palpitations that will happen for most people. It has to work in tandem with other services, assuming that there is electricity, internet, and network provider coverage in all areas, including most of the people in the rural areas,” Kaulem added.
She stressed any digital currency must be inclusive and account for the realities of rural users.
Beyond Zimbabwe, governments around the world remain torn between opportunity and risk.
The rise of cryptocurrencies has spurred innovation in payments, remittances, and financial inclusion. Yet regulators fear widespread adoption of private digital currencies could erode their sovereignty over monetary policy.
If businesses and households prefer to transact in cryptocurrencies rather than national money, central banks lose tools to fight inflation, manage liquidity, or stabilise economies during crises.
For fragile states battling hyperinflation, the danger is particularly acute.
Financial stability is another concern. CBDCs, unlike bank deposits, could draw funds directly out of banks. In times of stress, citizens might rush to convert deposits into CBDCs seen as safer, triggering bank runs.
Meanwhile, cryptocurrencies’ extreme volatility poses its own risks.
A currency that can lose 20% of its value in a week undermines its use as a reliable store of value. Policymakers fear such instability could worsen economic downturns if adoption spreads too widely.
Taxation and capital flight also loom large. Digital currencies can obscure transactions, making it easier to avoid taxes and move wealth abroad undetected.
For developing economies reliant on a narrow tax base, this could erode revenue and weaken the state’s ability to provide services. The potential to bypass foreign exchange restrictions further complicates currency management in countries such as Zimbabwe.
Security is another sticking point. Law enforcement agencies warn cryptocurrencies can enable money laundering, drug trafficking, terrorism financing, and sanctions evasion. The decentralised nature of digital assets makes it difficult for governments to trace illicit flows or freeze assets.
