Bill Watch 33/2019 [Monetary Policy and
the Rule of Law] 4th July 2019
of payment in specified foreign currencies would be legal tender in Zimbabwe.
However, section 17 of the Finance Act then confused matters by adding a
further provision stating that British pounds, US dollars, South African rand and
Botswana pula “shall be deemed to be legal tender” as if the new section 44A
were already in force and the Minister had made regulations under it.
As a result, the multi-currency system was not introduced by regulations made
under section 44A of the Reserve Bank of Zimbabwe Act. It was introduced by
the Finance (No. 2) Act itself, which deemed the Minister to have made the
appropriate regulations. Under our law Ministers cannot make regulations
amending or repealing Acts of Parliament, and it is arguable by enacting SI 142
the Minister has repealed the Finance Act’s declaration of foreign currencies as
legal tender ‒ which he cannot do.
2. SI 142 does not ban the use of foreign currency
Even if it is valid, SI 142 does not expressly state that foreign currencies cannot
be used in transactions or to price goods. Instead it provides that the
Zimbabwe dollar is the sole legal tender in Zimbabwe for all transactions. As
we said in our Bill Watch 32 of 24th June 2019 [link]:
“Legal tender” means a currency which, if offered in payment of a debt,
discharges the debt unless the creditor and the debtor have specifically
agreed otherwise. So if a debtor owes a creditor $20, say, the debtor can
normally repay the debt by offering $20 in RTGS dollars (because they are
legal tender). If however the parties have agreed that the debt should be
repaid in US dollars, then the debtor must repay it in those dollars. … [SI
142] does not specifically forbid contracts that require payments to be made
or calculated in a foreign currency, so if shopkeepers mark their prices in
US dollars, for example, or insist on payment in that currency there is
nothing to stop them doing so.”
3. SI 142 does not create any criminal offences
There is no provision in SI 142 of 2019 stating that the use of a foreign currency
rather than Zimbabwe dollars is a criminal offence. There could not be any
such provision because sections 44A and 64 of the Reserve Bank of
Zimbabwe, under which the SI was made, do not allow the Minister to create
criminal offences — or, to put it more precisely, the sections do not provide
expressly for criminal offences and, in the absence of such a provision, the
Minister cannot create them.
4. No other law makes it an offence to use foreign currency
If SI 142 of 2019 does not criminalise the use of foreign currency, is there any
other law that does? No, there isn’t.
The Reserve Bank Governor mentioned the Bank Use Promotion and
Suppression of Money Laundering Act [actually it was amended extensively six
years ago and is now called the Bank Use Promotion Act], but that Act does not
deal with foreign currency. It prohibits traders and other business people from
hoarding or trading in cash and provides for the confiscation of cash illegally