Harare Institute of Technology Announces Plan to Launch Zimbabwe’s CBDC

In an apparent shift from its prior anti-cryptocurrency attitude, the Reserve Bank of Zimbabwe, the nation’s central bank, is considering creating a regulatory sandbox for cryptocurrency entrepreneurs. According to reports, the proposed sandbox is a component of a larger plan by Zimbabwean authorities to reform the country’s financial sector, which has experienced severe hyperinflation since 2007. The creation of central bank digital money (CBDC) is being worked on, according to the Harare Institute of Technology (HIT). The statement was made over the weekend during the institution’s graduation ceremony, which Emerson Mnangagwa, the president of Zimbabwe, attended.

The tertiary institution claimed that the goal of creating the currency was to do away with currency manipulation, cash hoarding, and black market currency trading while also lowering printing and transaction costs.

Zimbabwe has been considering ways to implement a central bank digital currency since December 2021. (CBDC). Mthuli Ncube, the country’s finance minister, banned cryptocurrency trading in 2018, dealing a devastating blow to the rapidly expanding market for digital currencies there.

Zimbabweans are familiar with the digital currency phenomenon because they have long used mobile money systems like Ecocash and Netone’s OneMoney as well as their own Real Time Gross Settlement (RTGS).

A CBDC is viable in Zimbabwe, according to Prosper Mwedzi, a financial technology lawyer based in the UK, but there are a number of factors to take into account, including its effects on privacy, technical expertise, and resistance from banking institutions.

“In this regard, the design needs to ensure that it does not undermine the privacy of citizens. There is also the issue of ensuring that those who want to use cash can still use it otherwise those who are not connected online or without the hardware could end up being excluded,” he says.

Zimbabwe had disclosed that it would send a team to Nigeria to learn from their experiences in launching the first digital currency in Africa in October.

“We have got our fintech group and they are working very hard,” he said. “Most central banks in the world are working on this CBDC and we are definitely almost there.”

Mangudya also said the government had decided to pay annual bonuses to civil servants in U.S. dollars instead of the local currency as using the Zimbabwean dollar could have added to its recent depreciation.