BY CHARLES LAITON
A UNIVERSITY of Zimbabwe law lecturer has challenged the government’s reintroduction of the Zimbabwe dollar and the outlawing of a decade-old multi-currency system, arguing that the decision was inconsistent with the Act of Parliament which introduced the basket of foreign currencies in February 2009.
Godfrey Mupanga, a law lecturer, said in his High Court challenge that: “The regulations made by the first respondent (Finance minister) are manifestly inconsistent with the Act of Parliament under which they are made. This in itself contravenes Section 134 (c) of the Constitution of Zimbabwe.
This is so because the Reserve Bank of Zimbabwe (RBZ) Act itself specifically entrenches and still provides in Section 44A (2) the British pound, the United States dollar, South African rand and the Botswana pula as legal tender in Zimbabwe.”
In his founding affidavit filed alongside the court application, Mupanga said the regulations by Ncube purports to amend the principal legislation through subsidiary legislation, but amending a principal legislation is a primary law-making power that could only be exercised by Parliament.
“Even assuming that the first respondent can in terms of Section 64 as read with Section 44A of the RBZ Act make regulations which have the effect of amending the principal Act under which they are made, that again is in contravention of Section 134 (a) of the Constitution,” he said.
“This provision proscribes the delegation by Parliament of primary law-making power.
Such delegation would in fact amount to abrogation and abdication of legislative authority to an executive functionary. Amending a principal legislation is a primary law-making power that can only be exercised by Parliament.”
Mupanga said given that the decision of outlawing the multi-currency had the effect of affecting the national economy and Zimbabweans at large, the issue was supposed to have been brought to the attention of Parliament before any pronouncement was made.
“Moreover, in terms of Section 134 (f), it would appear that before publishing a Statutory Instrument (SI) such as that done by the first respondent, that would significantly affect the national economy or people’s lives, the authority responsible for making the instrument must consult Parliament. The hurried and sudden manner in which SI142 was published fails to comply with this peremptory requirement,” he added.
Mupanga lamented the move, saying it would worsen the people’s economic situation since individuals and companies’ balances in several bank accounts would be valued in “worthless Zimdollar” with nothing having been put in place to safeguard its value.
“The decision by the respondents to issue the regulation and the directive is grossly irrational and unreasonable in that: Firstly, the use of Zimbabwe dollar as a sole and legal tender was abandoned in 2009 because it failed as a currency.
A lot of factors may have contributed to its failure, chief among them was the unregulated printing of money by the second respondent (RBZ)…industry in Zimbabwe has not significantly improved since 2009.
The demand for imports and foreign currency still persists,” he said.
“There is no evidence that there are economic fundamentals in place to support the Zimbabwe dollar.”
Mupanga also said a week after the regulations were promulgated, the exchange rate has further plummeted from about ZWL6,3 to ZWL9,4 to the US dollar at the interbank rate, while prices of goods and services have doubled.
More significantly, Mupanga said the inconsistent policies by President Emmerson Mnangagwa’s government will force out and frustrate investors for both public and private projects.
“Had the first respondent fully applied his mind he would have realised that without investments our economy will no doubt continue to suffer,” he said.
The multi-currency regime was introduced in February 2009 through the Finance (No 2) Act of 2009 which amended the RBZ Act by the insertion of subsection 2 to section 44A.
The amendment introduced as legal tender in Zimbabwe a basket of currencies inclusive of the British pound, euro, United States dollar, South African rand and Botswana pula and by far the most dominant of these currencies remained the US dollar and the South African rand.
However, sometime in 2016, a surrogate currency known as the bond note was introduced.
Although its legality was challenged, consequently, Parliament amended the RBZ Act through the RBZ Amendment Act 1 of 2017 formally introducing the bond note and coins as legal tender to trade alongside the basket of currencies that was already in use.
However, in October 2018, after realising that the bank balances were not backed by real hard currency, the RBZ, through a monetary policy, directed the separation of nostro foreign currency accounts (FCAs) and real time gross settlement (RTGS) FCA accounts, as part of measures to preserve the value for foreign currency earners and to boost market confidence.
But, it increasingly became apparent that the bond note parity with the US dollar was a legal fiction.
The matter is pending.
Source : NewsDay