By Samuel Chiyangwa
COVID-19 is probably the worst global pandemic that has been recorded in this century. Many governments across the world are currently struggling in their response to this crisis which has drastically affected world economies.
Many governments responded by enforcing full or partial lockdowns in a bid to curb the spread of the virus but this has however resulted in many people losing their jobs while at the same time causing a huge drop in the gross domestic product (GDP).
COVID-19 has not spared Zimbabwe but has instead added more pressure to the already fragile economy which has been hard hit by hyper-inflationary effects among other things.
Efforts by the government to introduce the much-hated local currency some months ago saw inflation skyrocketing to levels similar to those recorded in the 2008-2009 period.
ZIMBABWE ECONOMIC WOES
Zimbabwe’s economy has been shrinking since 2000. This was compounded by subsequent sanctions imposed by the West over human rights violations and other governance malpractices like corruption.
Around 6 million Zimbabweans — about 34% of the population — live in extreme poverty. The IMF recently gave a very bleak assessment, saying that the country’s economy had contracted by 7.5% in 2019. The International Monetary Fund (IMF) projected a 0.8 percent growth for Zimbabwe’s economy 2020, much lower than a 3 percent forecast by the Zimbabwe government.
Real GDP growth (Annual percent change) is at -7.4% and Inflation rate, average consumer prices (Annual percent change) is at 319% according to IMF. However, Professor Steve Hanke of @CatoInstitute puts the Zimbabwe inflation at 876%/year. The country seems to be heading back to the traumatic hyper-inflation era of 2007/8 when inflation peaked at an official 231 million percent.
Two decades of economic turmoil have seen Zimbabwe’s formal economic sector shrinking significantly. For example, manufacturing, clothing and textile industries have almost totally collapsed, with factories reduced to dilapidated shells.
The consequence is that the informal sector has grown exponentially. It’s estimated that a staggering 90% of Zimbabwe’s working population is employed in this sector.
Currency problems account for a bigger part of Zimbabwe’ s economic woes. One of the biggest issues facing Zimbabwe is lack of sound monetary policy and financial systems.
However, some of these challenges can be a things of the past if Zimbabwe was to adopt Zimbocash a new startup focused on establishing sound money as an alternative to the local currencies in Zimbabwe.
ZIMBOCASH: The Natural Alternative
For starters, ZIMBOCASH is a decentralised currency for Zimbabwe. The team behind ZASH short for Zimbocash, has been developing the technology which aims to offer an alternative solution to the current financial challenges in Zimbabwe.
ZASH has strong encryption to protect funds and is built on the fastest and cheapest Tron blockchain.
Currently, ZASH has a daily trading volume of US$$125,393 and an increasing market-cap of US$300,000 trading at US$0.003 with only 110,455,723 ZASH in circulation out of 4.5 billion tokens according to data on Coin market cap.
These figures reflect the global demand in ZASH as well as the potential of the project. What this means is that an increase in ZASH circulation supply will increase both the market-cap and the daily trading volume.
For instance if a hypothetical 100% of the supply is released into the market at US$0.01 per coin, that will give ZASH a market cap of over US$45 million and a ranking in the top 100 crypto-currencies in the world.
Why are these figures important you may ask? First of all these theoretical figures makes Zimbocash worth noticing. It reveals the potential for a national transactional currency if launched at full scale.
In addition, this data proves that it is possible to create sound money for a nation which is less volatile and immune from inflation.
Zimbabwe has a strong remittance market with statistics ranging from half to over a billion USD in remittances. Zimbocash can also be used to send money across borders for a fraction of the cost as compared to traditional remittance firms like Western Union.
Surely the Zimbabwean government might need to take a look at this before it grow to become a billion dollar crypto-currency.
More over at a US$45 million dollar market cap Zimbocash can no longer be considered a small project according to Zimbabwe laws on enterprises.
By the way using our hypothetical projection, at US$45 million market cap, Zimbocash will have a market cap of over ZW$ 3.1 billion when rated to the local currency.
Certainly the Zimbabwe financial authorities ought to take a look at this and provide favorable regulatory framework. This decentralized currency might be a “powerful monetary policy tool” for the Reserve Bank of Zimbabwe after all.
Zimbabwe’s Finance Minister Mthuli Ncube said part of his plans to mitigate the country’s ongoing cash shortage include pushing the Central Bank to establish a ‘crypto-currency unit’ to better position the country to invest.
“Zimbabwe should be investing in understanding innovations and often central banks are too slow in investing in these technologies. But there are other countries which are moving faster. If you look at the Swiss central bank they are investing in- and understanding bitcoin,” said Ncube.
“One can pay for travel using bitcoin in Switzerland. So, if these countries can see value in this and where it’s headed, we should also pay attention. We have innovative youngsters so the idea shouldn’t be to stop it and say don’t do this, but rather the regulators should invest in catching up with them and find ways to understand it, then you regulate it because you now understand it”, he added.
Zimbocash’s head of communications and economist, Philip Haslam, said “In our view, Zimbocash is easily the most exciting new crypto-currency project in the world right now. We are fulfilling the dream of bitcoin — we’re developing a peer-to-peer payments platform and facilitating on-the-ground trade in a country.”
Zimbocash Signup Free tokens: https://zimbo.cash/z9f083
In addition Head of the Zimbocash subscriber network, Laswet Savadye, said the interest in the project in Zimbabwe was increasing exponentially.
“Zimbabwe is perhaps the only country where you would be able to establish a decentralised currency network of scale. Zimbabweans are desperate for a sound-money solution and there is no other alternative like Zimbocash,” Savadye said.
What is important to understand is that Zimbocash is not trying to replace the government’s financial system but to offer an alternative which both the government and the locals can utilize for the economic development of Zimbabwe. I certainly believe that Zimbocash is in line with the crypto-currency position of the Finance Minister.
The major focus of this article is not speculation for crypto-currency price but it is to demonstrate the usability and potential impact of Zimbocash in the Zimbabwean economy, arouse debate in the crypto-currency sector and invite government participation in the process.
The Ministry of Finance highlighted the need to have a crypto-currency regulatory framework for these new technology in their previous monetary policy reports. This is a good move as we see the whole world making necessary adjusts and warming up to the idea of crypto-currencies.
China is currently working on and testing a central bank issued crypto-currency which will be used to promote financial inclusion and efficiency in country. Zimbocash seek to address the above mentioned issues however, more work still needs to be done as Zimbocash in exploring a totally new field.
Zimbabweans home and abroad are encouraged to take part in debates about Zimbocash and learn more about the project which has the potential to change the financial system in Zimbabwe as we know it. Get all COVID-19 statistics for Zimbabwe from COVID-TRACKER