On 12th April, the innovation, science, and technology minister of the African country Zambia, Felix Mutate released a statement regarding the crypto laws in the country. Currently, Zambia is going through a testing phase of cryptocurrency regulations which will facilitate the country’s future crypto adoption.
Zambia, proactively looking to balance between technology and digital payment systems which can be sustainable in the longer run. In February, Mutati announced that the Bank of Zambia and the country’s regulators are collaborating on creating infrastructure and a comprehensive crypto policy. The aim behind the collaboration was to make Zambia a technology hub in Africa and bring investments to the country.
The African nation wants to make its people more included in digital financial Services and cryptocurrencies will play a crucial role in financial inclusion. Additionally, it will help the country’s economy in the longer run. According to the tech minister, before the launch of cryptocurrencies, it’s mandatory to ensure digital identities and other related infrastructure to protect stakeholders from any unforeseen mishaps.
However, Zambia is also facing the problem of debt restructuring which already has been delayed with the largest portion taken from Chinese investors. According to treasury secretary, Felix Nkulukusa, if the debt restructuring is postponed further, the country risks losing the benefits of its macroeconomic reforms.
In February, Felix Mutate called “cryptocurrency will be a driver for financial inclusion and a change maker for Zambia’s economy.” Additionally, in November 2022 International Monetary Fund (IMF) released a report on the situation of African countries in crypto adoption and regulations. The IMF found that regulating a highly unpredictable decentralized system is a challenge for most governments. Additionally, the report showed the situation of sub-saharan countries in crypto regulation and revealed that only third countries formally regulate cryptocurrencies in the region.
Many African countries are trying to formulate a well-planned crypto regulation to attract investments. In January, another African nation, Nigeria’s central bank, released a report, “Nigeria Payments System Vision 2025” that will help the country to develop a CBDC. For those who are not aware, Nigeria is one of the world’s pioneers in central bank digital currency adoption.
The proactiveness of Zambia in formulating a well-planned crypto regulation is a commendable step. However, the comprehensive policy is yet to be formulated but it is a lesson to other countries that before making regulations it is inevitable to provide infrastructure for a smooth transition.