Time To Digitize The Zimbabwe Dollar

New $10 Bond Notes

Time to digitize the Zimbabwe dollar | Terence Zimwara



Time To Digitize The Zimbabwe Dollar


Zimbabwe is on the cusp of another cataclysmic currency collapse. Reports are spreading that merchants and foreign currency traders are now rejecting lower denomination banknotes.

When Zimbabwe went through similar economic conditions between 2004 and 2008, lower denomination banknotes immediately made way for higher-value notes. The recent injection of higher denomination banknotes, the $10 and $20 bills into circulation seem to have triggered a familiar change reaction.

Rejection by the market

As of now, it appears the introduction of the $20 note, which hit the streets earlier this week, is following the same pattern. The now worn out $2 bond note as well as the coins are not an acceptable medium of exchange anymore as far as traders are concerned.

Popular market places, informal traders and retail outlets are suddenly rejecting the $2 bond notes. No valid reasons are given as usual although it’s easy to tie this to the notes’ diminished buying power. The country’s hyperinflation causes a massive erosion in the value of the Zimbabwean currency.

The $2 bond notes remain legal tender but because market players hold sway in the economy, everyone else is forced to follow suit.

Predictably, monetary authorities have responded with threats, but as history has repeatedly shown, these have little effect. In any case, monetary authorities are not oblivious to realities on the ground.

Needless to say, when currency traders or hoarders abruptly start rejecting coins or notes (as is the case now) cash holders lose out. When a currency gets rejected or becomes worthless overnight, it is the ordinary folks that suffer.

The only relief for those holding large amounts of rejected currency is purchasing unwanted and sometimes expensive goods at supermarket chains. By law, such entities cannot reject any currency that is backed by the state.

In the meantime, one expects foreign currency dealers and small retailers to reject the $10 and $20 banknotes once higher denominations banknotes are introduced. This is a cycle that will continue as long as the country is plagued by an unstable currency and hyperinflation.

It should be clear to the central bank by now that it cannot remedy the difficult situation by printing higher denominations notes. It is time the central bank adopts a different approach to currency management. Additionally, the central bank needs a plan of dealing with public confidence deficiency that plagues it.

Ordinary Zimbabweans now lack confidence in the central bank’s ability to issue and manage a stable currency. The situation is made worse when key personnel at the central bank are implicated scandals that shame the institution.

Confidence deficiency

Time To Digitize The Zimbabwe Dollar
Time To Digitize The Zimbabwe Dollar

Unfortunately, this confidence deficiency has long term negative implications for the institution. If this is not remedied quickly, it will preclude the country from having a stable currency for a long time.

Steps necessary to correct this may take time to implement hence they must begin now.

While current negative perceptions about the central bank are entrenched, they are surmountable. The blockchain is the most well-placed technology to achieve this.

The blockchain—or a publicly distributed ledger as it is sometimes called—is a technology that is now accepted as a panacea to the problem of lack of trust or confidence. This technology is particularly useful for a central bank operating in a small country like Zimbabwe.

Learning from others

Much smaller nations like the Republic of Marshall Islands (RMI) have taken that leap of faith by trusting this technology. RMI is piloting own digital currency.

The RMI did not have start own digital currency project from scratch but it chose to partner with Algorand to achieve this. Algorand boasts one of the most scalable and fast blockchain platforms which make it suitable for the launch of a stable central digital currency.

Similarly, Zimbabwe can choose Alogorand to digitize the Zimbabwe dollar thus halting its current freefall.

Furthermore, Zimbabwe’s central bank is not a trusted institution because it reneges on some of its pledges. When local currency was reintroduced in late 2016, the central bank repeatedly assured Zimbabwean citizens that it would break from the past bad policies.

Nearly four years later, it looks like the central bank cannot honour these pledges and this saps the little confidence it has left. The blockchain can remedy this because its inherent transparency makes difficult for officials that cheat to continue doing so.

Well, monetary authorities will think twice before pursuing a policy that may be detrimental to their image. In other words, the central bank will be discouraged from injecting more money into circulation without adequately explaining itself. Unbridled printing (or creation) of money is already blamed for Zimbabwe’s economic woes.

The blockchain potentially pre-empts clandestine or unauthorized creation of money (counterfeiting) and this works to the advantage of the central bank itself.

Finally, Zimbabwe must take a leaf from China, its long term friend and the world’s second-largest economy. China has moved ahead with its digital Yuan project and reports suggest trials are already underway in some cities.

However, unlike China which is well resourced, Zimbabwe cannot achieve a digital Zimdollar by starting its blockchain as it lacks this expertise. The best route would be to outsource from private technology companies as these companies have first adopter advantage over central banks.


Besides, the objective should be about restoring confidence. Zimbabweans have already shown confidence in other institutions which are not the Reserve Bank of Zimbabwe. Partnering with Algorand just the RMI has done is one of the ways of doing this.


Terence Zimwara is an Ambassador with Algorand Foundation, a technology company behind the world’s first scalable and decentralized blockchain based on pure proof of stake consensus. The Foundation is offering funding across application development, tools & infrastructure, research, and education & community. You can contact Terence on Whatsapp 263 771 799 901 or tem2ra@gmail.com


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