Zimbabwe’s army seized control of the country on Tuesday night, claiming it was removing “criminals” around Robert Mugabe, and held the president and his family under house arrest. But can the military intervention really bring change for the country’s ailing economy?
Not unlike the after-effects of the Greek crisis of 2015 and the current panic in Venezuela, Zimbabwe has seen an unprecedented change in the local cryptocurrency market. The price of Bitcoin jumped as much as 10 percent on Zimbabwe’s Golix exchange on Wednesday after the country’s army seized power. Zimbabweans, just like Venezuelans, are buying things they think might retain value.
The crisis and the need for hard cash have pushed people into the black market.
Zimbabwe abandoned its national currency in 2009 after suffering the second highest recorded inflation rate in history. Since then, an increasingly dire economic situation and political instability, including a 90% unemployment rate and last week’s army intervention, Bitcoin is enjoying a moment of importance, with a single unit of the digital currency reaching $13500.
Alisa Strobel, a senior economist at IHS Markit from Cape Town, says this price is evidence of Zimbabwe’s broken economy.
“It is estimated that Bitcoin traded above an 85% premium yesterday [Thursday]. Currently, demand for Bitcoin in Zimbabwe exceeds supply,” she says. “Bitcoin mining, according to Golix, requires a large amount of electricity – a challenge in a country with severe electricity shortages.”
“There is massive potential for Bitcoin, not only in Zimbabwe but also in Africa.”
Source: Al Jazeera