Bitcoin becomes a safe haven for Zimbabweans facing inflation troubles
Recent challenges in the country have pushed authorities to implement a series of unpopular decisions; so citizens are finding ways to circumvent them by using Bitcoin
The Reserve Bank of Zimbabwe (RBZ) has officially named Zimswitch as the national payment switch service in a notice to the public released last Thursday. All financial services providers in the country, including mobile money operators (MMO) must now connect to this platform.
It is presumed that this has been allowed to facilitate interoperability between financial services providers.
There is speculation that Ecocash, the country’s largest MMO, is the target of the central bank’s decision. In the past, Ecocash has faced accusations of meddling with efforts to enhance exchange between MMOs — as they would stand to benefit from the status quo.
Critics of the company have voiced out concerns that Ecocash is deliberately carrying out these efforts to preserve its monopoly, which it gained after investing heavily in Zimbabwe’s financial infrastructure.
A survey released by the Postal and Telecommunications Regulatory Authority of Zimbabwe showed that Ecocash handles more than 94% of all mobile money payments.
To supplement these findings, a study conducted by the Reserve Bank of Zimbabwe itself shows that mobile money is the payment method of choice for national retail payments, accounting for 80% of all payments made within the category.
For several years, Ecocash’s dominance has inevitably been a source of tension with regulators and, now it seems, the government.
Recently, the government released a directive to suspend mobile money transactions. This, alongside the country’s economic struggles with hyperinflation, is allegedly creating tension in the political landscape.
Ecocash has refused to abide by the suspension order, arguing that the government official who made the announcement he did not consult the RBZ before making the decision public. This standoff was short-lived, and ended when the RBZ issuing a statement in agreement with the government’s position.
These turn of events have prompted citizens to use Bitcoin — particularly for cross border payments. This is likely because the digital currency is faster to transfer and does not under current regulations.
Others are also choosing to store their funds in Bitcoin because it provides a sense of control. The government’s attempts to control or suspend Ecocash cannot be replicated with Bitcoin. In addition, the cryptocurrency is also not impacted by local inflation.
Finally, overseas workers have also started using Bitcoin to remit funds to their home countries.
The RBZ ordered banks to stop support for all crypto-related businesses; however, Bitcoin trading and payment transactions continue to take place.