By ETimes
HARARE – The Zimbabwe Gold (ZiG) has the potential to thrive, but there is a need for the apex bank and financial institutions to use cutting-edge technologies like Distributed Ledger Technology (DLT), which ensures transaction efficiency and is even more difficult to disrupt, the Zimbabwe Coalition on Debt and Development (ZIMCODD) has said.
In a year when it is drowning in foreign debt, experiencing a devastating drought, and facing two decades of international isolation, the deck is loaded against Zimbabwe’s most recent attempts to reinvent its currency.
The ZiG replaced the inflation-battered old Zimbabwean dollar.
Majority of banks, merchants, and companies successfully changed their old Zimbabwe dollar balances to ZiG, despite the initial confusion in the market surrounding the new currency.
“There is a chance for ZiG to succeed if the Reserve Bank of Zimbabwe and banks adopt advanced technologies such as DLT,” ZIMCODD stated in the latest report.
“This ensures that all market transactions are safely recorded, as no documents can be falsified since all data is immutable. This will circumvent the dangers of reliance on centralised, traditional database systems, which are highly prone to manipulation, may be hacked, and are susceptible to genuine human errors.”
Small and Medium Enterprises Association of Zimbabwe chief executive officer, Farai Mutambanengwe said that the success or failure of ZiG is not based on technology or anything else, but purely on market acceptance.
“If the ZiG is going to remain a currency that cannot perform certain functions, especially official functions, and also things like buying fuel, whether you put it on a block chain or on whatever platform, it’s just not going to be a very functional currency.
“So right now, what needs to be enhanced is its acceptability in the market,” he said.
While DLT is currently playing a big part in financial modernisations and is the backbone technology enabling the fintech revolution, its initial use has been in the area of payments.
“In addition, advanced technologies are vital in ensuring precious mineral production tracking and monitoring to minimise the chances of leakages through illicit trading,” added ZIMCODD.
Zimbabwe has vast natural resources, but the country is not significantly benefiting from this finite resource due to under exploration, and most multinationals in the sector under-declare the quantity and quality of minerals.
ZIMCODD said exploration was not only critical in guaranteeing the sustainability of mining activities, but also ensured that the government gets more taxes for economic development.
This comes as the country has lost over US$32.179 billion to illicit financial flows (IFFs) in the last two decades and approximately US$1.5 billion in gold smuggling in 2020 against US$800 million official Fidelity exports, according to Crisis Coalition in Zimbabwe.