A regulatory analysis of digital financial services and the adoption of central bank digital currencies in Zimbabwe and South Africa

The use of digital financial services such as mobile money has created new frontiers for more people, especially the poor, to participate in the formal payment systems in Zimbabwe and South Africa. Individuals who do not have bank accounts are now able to access financial services and products using technological devices such as mobile phones. In this regard, digital financial services have broadened financial inclusion allowing the poor to participate in financial markets and other formal economic activities which they were unable to access before. In addition, digital financial services represent a broad range of emerging financial technology (fintech) products which could lead to the adoption of digital currencies in many countries, including Zimbabwe and South Africa. These fintech products have been useful channels for the poor to transact and receive money since the outbreak of the coronavirus (covid-19) pandemic. However, the regulation of digital financial services and their products remains problematic in South Africa and Zimbabwe owing, in part, to the absence of statutes that expressly and robustly regulate these services. Furthermore, there is no sufficient policy clarity on the adoption of central bank digital currencies in the aforesaid countries. Accordingly, this article explores the adequacy of the regulatory frameworks and robustness of the enforcement approaches adopted in Zimbabwe and South Africa. This is also done in the context of the African Union (AU)’s Agenda 2063 goal of enabling trade linkages amongst African countries.