Zimbabwe moves to align fintech with conventional financial system Fintech enthusiasts and players not popping the champagne bottle just yet

Zimbabwean financial regulator, the Reserve Bank of Zimbabwe (RBZ) has of late been showing signs that it has had a change of heart in its attitude towards innovative financial products.

The RBZ has previously had an uneasy relationship with private fintech organizations, particularly those that facilitated the purchase of digital tokens by the general public. The RBZ’s spat with Golix cryptocurrency exchange generated global headlines leading to a slowdown of growth of this industry.

To signal its changed attitude—perhaps possibly after studying financial innovations—the RBZ made the first visible sign when it announced the setting up of fintech committees to further the innovations.

In its latest move, the RBZ, through the monetary policy statement again, revealed that it is in the process of finalizing a regulatory sandbox framework. The framework will outline the qualification, application and evaluation criterion for entities to be admitted into the sandbox.

According to the RBZ, the coming live of this framework will promote competition and efficiencies through innovation. In addition, the central bank now wants banking institutions to upgrade their information communication technologies (ICTs) to be system consistent with developments in the ‘Fourth Industrial Revolution’.

Until now, banks have been under instructions not to facilitate the movements of funds from the conventional financial system to cryptocurrency networks or exchanges.

No celebrations just yet

AfricaBlockchainMedia.com sought views from a cross section of the country’s small community of finetch enthusiasts and innovators about the RBZ’s latest announcement.  

Some welcomed the announcement, believing this will set the tone for a better adoption of innovations like cryptocurrencies or even central bank digital currency (CBDC) by ordinary Zimbabweans.

On the other hand, some believe this announcement will not lead to any real change in the foreseeable future. They think the announcement is just for show.

While the reaction to the news is mixed, there is a general agreement that Zimbabwe needs to move with the times and adopt the new technologies.

Laswet Savadye of Zimbocash, a Zimbabwe focused cryptocurrency project that has made strides in conscientising ordinary people about this innovation, cautiously welcomed the RBZ statement but was quick to suggest an ideal way of crafting the appropriate regulatory framework.

“Fintech is a relatively a new phenomenon in emerging markets. To discuss its regulation, first we need to understand the forces that shape regulation and how such forces in emerging economies are different from those in developed economies.”

Savadye believes that getting the right answers to these questions will be helpful in gaining an understanding of the general direction in which the Fintech base is heading.

According Savadye, the forces which shape regulatory incentives in emerging economies are driven by the need for inclusive growth as well as public pressure to develop new and efficient solutions to existing problems.

“Emerging economies are characterized by incomplete markets with several essential financial sources failing to reach large populations. Consequently, there are many who do not have access to financial services, which limits their ability to do business or save for retirement. This is where fintech comes in.”

Now given this state of affairs, Savadye is of the opinion that Zimbabwean regulators should seek guidance from industry players when crafting a regulatory framework. This is important because it not only results in an effective regulation but one which fosters more innovation.

Following the lead of Asian countries

This approach has been used to good effect in Asian countries like Japan, Taiwan and Singapore etc. In Taiwan, Jason Hsu, a prominent player in that country’s fintech space, became a legislator a few years ago and is now using his new found position to further the interests of the industry regionally and globally.

Similarly, Japanese authorities are known to follow the recommendations of established fintech providers when calibrating the regulatory framework.

In the Zimbabwe situation however, when Fintech committees were setup, these did not include players from this space. For Savadye and others, this is a problem.

Meanwhile, another Zimbabwean crypto enthusiast, Collins Masiyiwa, welcomed this latest RBZ announcement, adding that Zimbabwe has long been lagging on this front.

“I think in Zimbabwe, (this move) it’s long overdue, we need more innovative solutions in the banking sector because technology is evolving every day. We are probably the only country in Southern Africa where citizens cannot receive PayPal payments. More innovative solutions to the Financial sector like cryptocurrencies are way long overdue.”

However, others were not so sanguine. They argue that this is just another big announcement without any real prospects of this being implemented quickly enough.

Reason for Skepticism

One influential figure in Zimbabwe’s blockchain space, who did not wish to be identified, was hardly moved by this latest announcement.

“The only thing I think about it is they are taking a dribble. They are happy with a broken system because it works in their favour.”

According to him, the RBZ is just putting on a show but lacks the will to actually implement some the fintech proposals contained in the latest monetary policy.

The same sentiments were echoed by another crypto enthusiast when he posted his sentiments in one social media chat group about the RBZ’s fintech announcement. The same individual also notes that the monetary policy statement places a lot of emphasis on banks and less on the private players (tech companies) that fall outside the RBZ’s regulatory reach.

It is clear from the responses elicited from Zimbabwe’s fintech enthusiasts, which the RBZ has to do more gain the confidence of the people that matter on this subject. Without their confidence, this announcement will be just like the many before this, empty promises.