The apparent military coup in Zimbabwe has been greeted with far more excitement outside the country, than by people on the inside. Political observers were excited by the possibility that the despotic regime that has been bleeding the country dry for almost forty years would be possibly replaced by something more palatable. Blockchain technology enthusiasts were equally excited by the news, although for different reasons.
Due to a confluence of political and economic circumstances, Zimbabwe has been one of the foremost proving grounds for blockchain based cryptocurrency such as Bitcoin. Due to a severe cash shortage, the demand for cryptocurrency has been so strong, that as a result of this excessive demand, Bitcoin now trades at nearly double the price in Zimbabwe as it does on other major global exchanges. As of Thursday afternoon, Bitcoin was reported to have made a slight correction from the previous high of $14,500 to be trading at about $12,500.
The extremely volatile nature of blockchain-based cryptocurrencies, seemingly makes Bitcoin a strange candidate for a safe haven asset. But if you happen to live in a currency-starved country that is also in the midst of a coup and that has ATM withdrawals limited to $20 a day, digital currency all of a sudden seems to provide the only viable alternative. As the week progressed and evidence that a coup had indeed occurred became more omnipresent, blockchain enthusiasts began to speculate whether Bitcoin would reach a new price record – propelled forward by the volatile political situation.
The excitement exhibited by outside observers was however not matched by those inside the country – most of whom greeted the news with general caution and skepticism. Their reaction is somewhat understandable as over the past 37 years, Zimbabwe’s political elite has made its life’s mission to obliterate any semblance of democratic and civic institutions in the country. One of the central people in the decades-long assault on civil society has been the very man now appears slated to replace Robert Mugabe – his much feared security chief and top enforcer – Emmerson Mnangagwa. Far from being the face of democratic opposition, Mr. Mnangagwa has for decades been in charge of the machine of political repression that has kept Zimbabwe functioning as a stone-age dictatorship. Nearly every accusation of corruption and human rights violations that can be levelled against the erstwhile president Mugabe, could just as easily be extended to the man that until the recent conflict, had been his close ally and personal enforcer. That is why most people inside Zimbabwe are viewing this as palace coup, a squabbling for power amongst the ruling elite, rather than a genuine democratic revolution.
While the immediate cause of the coup seems to be Mr. Mugabe’s attempt to install his own wife as vice president at the expense of other, more senior members of the ruling elite, more informed spectators have made comments that China – the African continent’s veritable paymaster – has been anything but a passive observer in the unfolding events. Over the past decade and half, China’s investment into the African continent has eclipsed that of any other countries combined. So powerful has become China’s economic clout on the continent that African countries such as Zimbabwe now find themselves completely subservient to China’s economic and political machinations. China is also Zimbabwe’s biggest source of foreign currency and top trading partner, having invested in more than 128 projects in the African country between 2000 and 2012. Clearly no investor can be happy about the prospect of their investment not being able to pay off. It is no secret that Mugabe’s economic mismanagement was pushing Zimbabwe exactly down that path of economic insolvency – exasperating the Chinese investors.
It is also no secret in Zimbabwe’s that Mr. Mnangangwa enjoys close and long-standing ties with China. Mnangagwa, who first began to cultivate those ties in the 1960s, when he visited the country for training as a guerrilla fighter, has been open about his admiration for China’s government. Over the years, he maintained strong personal and diplomatic links with the PRC, even sending one of his children to receive education at a Chinese university and learn Mandarin.
Days before the political turmoil materialized in Harare, Zimbabwean army chief Constantino Chiwenga visited Beijing for a meeting with Chinese officials. China’s Foreign Ministry has stated the Nov. 5 meeting was a “normal military exchange as agreed by the two countries,” but there is speculation that Chiwenga, now a leading figure in the undeclared coup, was seeking to secure China’s support for a move against Mugabe.
There is perhaps a degree of irony in the fact that China, the country that (despite recent restrictions) is still one of the world’s leaders in cryptocurrency mining is now trying to throw its influence in Zimbabwe – a country where cryptocurrency usage is one of the world’s highest. While not at an official level, the Chinese Yuan has frequently been used by Zimbabweans to settle transactions – due to a scarcity of US dollars. While there have been speculations about various governments possibly adopting blockcahin-based cryptocurrencies, China has not yet been one of them. If however, the Chinese government was to consider digitizing the Yuan, then obviously its circulation would not be only limited to mainland China. As a country already heavily relying on the Yuan, Zimbabwe might find itself adopting the (as of yet theoretical) digital Yuan by default. If this were to come true, then Zimbabwe would find itself in a unique position of adopting a blockchain based digital currency that is both not decentralized like Bitcoin (as it would be controlled by the People’s Bank of China) and at the same time not issued by its own government.