LEGAL MATTERS: Currency laws must be clear, detailed

If the question what is Zimbabwe’s current legal tender was to be asked, one would be faced with huge difficulty to provide a concise response.

In the past year, there has been so much tinkering with the country’s financial legal instruments to the extent that one is left wondering where we really stand going forward, in so far as the issue of currency is concerned.
This scenario is extremely unfortunate since it provides uncertainty about the future. Corporates and individuals are left in confusion as far as business strategy and forward planning are concerned.
Disputes that have been pending in the courts revolving around the issue of currency, are further thrown into confusion rendering some of them academic and therefore irrelevant.
I have been compelled to take a relook at the issue of currency after Statutory Instrument No. 2 of 2020, the Exchange Control (Exclusive use of Zimbabwe dollar for domestic transactions) Amendment Regulations.
These were gazetted on March 29, 2020. They seek to amend the Exchange Control (Exclusive use of Zimbabwe dollar for domestic transactions) Amendment Regulations 212 of 2019.
It may serve well to outline the series of Statutory Instruments and amendments to enabling legislation that have happened since February 2009 in order to put the reader into proper perspective.
Statutory Instrument 33 of 2019 was gazetted on February 22, 2019.
It was passed under the Presidential Powers Temporary Measures Act [Chapter 10;20. This legislation sought to “amend” the Reserve Bank Act by making provision for an electronic currency known as the “RTGS dollar”. Hitherto, the Reserve Bank Act had only provided for issuance of bank notes and coins.
This law therefore, sought to interfere with the multi-currency regime that had existed since 2009.

In June 2019, Statutory Instrument 142 of 2019 was passed and its effect was to delegitimise the multi-currency regime and provide for the exclusive use of the Zimbabwe dollar.
Statutory Instruments 33 and 142 of 2019 were incorporated into the Finance Act No. 2 of 2019 that was gazetted at the end of August 2019.
The Finance Act amended Section 44 (c) of the Reserve Bank of Zimbabwe. It provided for stiff penalties for anyone found transacting in foreign currency or possessing foreign currency.
The draconian punishments provided for in Statutory Instrument 142 left everyone convinced that from henceforth, we were never going to hear of any foreign currency transacting.
Its provisions sent out a loud and clear message that the State was now only keen on promoting the local currency.
Still not satisfied, government in September 2019, passed Statutory Instrument 212 of 2019, the Exchange Control (Exclusive use of Zimbabwe dollar for domestic transactions) Amendment Regulations. One is to note that this Statutory Instrument was introduced barely three months after the banning of the multi-currency regime.
It sought to relax the heavy-handed criminalising of foreign currency transacting by providing a few exceptions in which the public would purchase or sell using foreign currency. As an illustration, some fuel dealers were allowed to transact in foreign currency.
Finally, the Statutory Instrument No. 2 of 2020, sought to amend Statutory Instrument 212 of 2019 by introducing a new Section 6. Section 6 (2) of the Amendment reads as follows;

“Notwithstanding these regulations, any person may pay for goods and services chargeable in Zimbabwe dollars in foreign currency using his or her free funds at the ruling rate at the date of payment”.
Worth to note is that Statutory Instrument 212 was titled, “Exclusive use of Zimbabwe dollar for domestic transactions”.
It had been intended to cement the rule that only the local currency was now legal tender, save for a few transactions that the law provided for.

The latest amendment renders the purpose of Statutory Instrument 212 of 2019 irrelevant. Further, it even renders the title laughable.
This is so because in one simple paragraph, government has sought to re-introduce multi-currency transacting. The only worry is that the law has not been made concise so as to remove any doubt and potential conflict on interpretation.

Such confusion arises because the provision appears to give the option to offer to pay in foreign currency to a purchaser who is a holder of free funds that are “lawfully held”.
It does not seem to appear that a provider for a service say in this instance a legal practitioner, may charge in foreign currency.
Others may actually argue that the contrary is true and this is to say a provider of services or seller of goods has the option to charge in foreign currency.

This confusion is not helpful. A statute must be crafted in such a way that it provides certainty and avoids a plethora of areas of conflict.
The problem does not end there. A lot of cases are pending before the courts revolving around disputes that arose around the multi-currency era.
This is more particularly around the question whether creditors ought to recover United States dollars or the Zimbabwe dollar.

The case of Zambezi Gas v NR Barber reported under SC3 of 20 and that has since spilled to the Constitutional Court is a good illustration.
In the advent of the latest amendment that seeks to legalise the transacting in foreign currency, one is left to wonder how the courts are going to interpret the latest legal position in the light of pending disputes.
How would for example, a debtor insist on refusing to pay a debt accrued in foreign currency when it is now quite clear that the law recognises foreign currency transacting as valid.
More worrisome is why the Reserve Bank Act has not been amended to cater for the latest position. It is not fair to smuggle a few lines in a Statutory instrument that has a far-reaching effect on people’s livelihoods.
The courts are likely to face more challenges in interpreting disputes revolving around debts accrued in foreign currency.
An amendment must be introduced to make a composite legislation that is concise and detailed.
n Muza is a Harare-based legal practitioner. He writes in his personal capacity.