Hilary Muza 
DOING business is never an easy endeavour. Doing it in Zimbabwe is an even trickier proposition, because of all the financial and regulatory challenges facing businesses. 
Several businesses have had to adapt and develop workarounds that keep them viable, while remaining compliant with the law. At one point, businesses had to circumvent a law that says businesses cannot charge for goods and services in foreign currency.
This stipulation was relaxed when the law allowed for parties to agree to contract in foreign currency, if the purchaser had free funds available and was willing to part with them.
For the sake of clarity, “free funds” means foreign currency legally held by an individual or business entity. In all of this, a few things must not be forgotten.
Firstly, according to the law, the Zimbabwe dollar is still the sole legal currency according to Reserve Bank of Zimbabwe (Legal Tender) Regulations, 2019, published in statutory instrument 142/19 (“SI 142/19”).
The relaxation of this rule, allowing parties to transact in foreign currency, was done through the Exchange Control (Exclusive Use of Zimbabwe Dollar for Domestic Transactions) (Amendment) Regulations, 2020 (No. 2), published in statutory instrument 85/19 (“SI 85/19”).
Secondly, charging in foreign currency is only competent if there is a clear and unequivocal agreement by both parties to do so.
It cannot simply be done as of right in most cases. There are cases where transactions are purely in foreign currency, such as tobacco contractor loan agreements. Other than these limited ring-fenced scenarios, the right to be paid in foreign currency is not granted to everyone.
Lastly, if private businesses are prohibited from getting paid in foreign currency without the buyer’s consent, then the ability of extensions of the state, such as local councils, to levy charges in foreign currency must be investigated.
This brings me to this week’s topic. In recent weeks some town and city councils have made it clear that they intend to charge residents in United States Dollars (US$) for council rates.
Indeed, some have already begun doing so. This is a calculated business decision, which makes economic sense given the economic climate. Local authorities cannot be faulted for wanting to make sound business decisions.
Without revenue in foreign currency they are crippled and cannot deliver the kind of service that citizens expect of them.
The only problem is that their hands are tied. I will illustrate this from a legal standpoint. In terms of the law, local authorities and parastatals perform very similar administrative functions.
They are near identical in terms of their legal anatomy in that they are controlled by government and are designed to achieve specific socio-economic and socio-political goals. I emphasise their similarities because it only makes sense that the rules that bind one must bind the other.
Recently, a law came into force that exempts the Zesa Holdings (Zesa) from charging in local currency, allowing it to bill exporters in foreign currency. This statutory instrument, the Exchange Control (Payment for Electricity and Related Services in Foreign Currency by Exporters and Partial Exporters) Order, 2022 published in statutory instrument131/22 (“SI 131/22”), specifically states that it operates as an exception to the position stated in SI 142/19. To my knowledge, there is not such exception in place for local councils.
If Zesa requires a special dispensation from the legislature to be able to bill in foreign currency, then local authorities require the same dispensation. Without it, they cannot charge citizens in foreign currency for rates or any other goods and services. Local authorities, therefore, do not have the right to impose the obligation to pay in foreign currency on citizens.
As an individual unschooled in economics, the solution as I see it is to dollarise. The market demands it, the need for it drives the parallel market. Even government entities like local authorities acknowledge the unspoken need to dollarise the economy.
As things stand, government, in my humble view has two options. It must either fix the economy or fix the legislation — both are monumental tasks.
By fixing the economy, I mean create (or acknowledge) a universally accepted medium of value; a medium accepted by the market.
That way, service providers can buy critical assets and components that allow them to maintain service delivery while charging their clients in the same currency that they (the clients) earn.
By fixing the legislation, I mean have a unitary legal framework that provides for Zimbabwe currency laws. Out exchange control framework gets more convoluted with the introduction of each new statutory instrument. It might be time to re-strategise and pivot in a new direction.
As Michel De Montaigne puts it, “it would be better to have no laws at all, than to have too many.” This is not to say that lawlessness should abound, but a free market should drive the economy, not regulation.
Muza is a duly admitted lawyer with expertise in business law, labour law and commercial litigation. He writes in his personal capacity. For feedback, email him at hilarykmuza@gmail.com or call on +263719042628.
