The government of Zimbabwe has with immediate effect banned the sale of goods in foreign currency, it has emerged.
The Minister of Finance and Economic Development Hon. Mthuli Ncube , before flying to China today enacted instrument 142 which criminalizes the sale of goods or services in any currency other than the local currency, Bond Notes and RTGS$.
The instrument however still allows government to collect revenue via duty imports in foreign currency, and allows citizens to pay for airline tickets in foreign currency.
For most businesses the major concern will be repatriation, how will businesses get back their foreign currency if they invest in Zimbabwe, How will local players restock after products have sold in bond notes
Reserve Bank of Zimbabwe (Legal Tender) Regulations, 2019 IT is hereby notified that the Minister of Finance and Economic Development has, in terms of section 64 as read with section 44A of the Reserve Bank of Zimbabwe Act [Chapter 22:15], made the following regulations:— Title 1. These regulations may be cited as the Reserve Bank of Zimbabwe (Legal Tender) Regulations, 2019. Zimbabwe dollar to be the sole currency for legal tender purposes 2. (1) Subject to section 3, with effect from the 24th June, 2019, the British pound, United States dollar, South African rand, Botswana pula and any other foreign currency whatsoever shall no longer be legal tender alongside the Zimbabwe dollar in any transactions in Zimbabwe. (2) Accordingly, the Zimbabwe dollar shall, with effect from the 24th June, 2019, but subject to section 3, be the sole legal tender in Zimbabwe in all transactions. (3) For the avoidance of doubt it is declared that— (a) references to the Zimbabwe dollar are coterminous with references to the following and to no other forms of legal tender or currency— (i) the bond notes and coins referred to in section 44B of the Act; and (ii) the electronic currency prescribed for the purposes of section 44C of the Act, that is to say to the RTGS dollar; (b) the abovementioned bond notes and RTGS dollars are at par with the Zimbabwe dollar, that is to say each bond not unit and each RTGS dollar is equivalent to a
3. (1) Nothing in section 2 shall affect— (a) the opening or operation of foreign currency designated accounts, otherwise known as “Nostro FCA accounts”, which shall continue to be designated in the foreign currencies with which they are opened and in which they are operated, nor shall section 2 affect the making of foreign payments from such accounts; (b) the requirement to pay in any of the foreign currencies referred to in section 2(1) duties of customs in terms of the Customs and Excise Act [Chapter 23:02] that are payable on the importation of goods specified under that Act to be luxury goods, or, in respect of such goods, to pay any import or value added tax in any of the foreign currencies referred to in section 2(1) as required by or under the Value Added Tax Act [Chapter 23:12 ]. (2) Notwithstanding section 2 it is permissible to tender any of the foreign currencies referred to in section 2(1) in payment for international airline services.
Speaking to this publication, the Ministry of Media, Information and Broadcasting Services’ permanent secretary Nick Mangwana confirmed the latest development adding that all prices cease to be pegged in multi- currency with effect from today, although this does not affect the current Foreign Currency Accounts standing.
The government has of late been preaching the introduction of a new currency by year end.
The latest announcement which has been received with great shock amongst many, will definitely affect businesses whose survival were anchored mainly on imports.
This makes it difficult for them to restock.
Government has failed to provide the critical foreign currency through the inter-bank or any formal sources hence business greatly depends on alternative sources of foreign currency for survival.
This move effectively means that businesses can be sued or arrested for breaking the statute, and must with immediate effect desist from charging this foreign currency.
The obvious early effects of such a policy will be disappearance of commodity from the shelves, as millions will rush to buy the last product that be, willing to go for the RTGS price .
This will also mean that government legally stops to collect foreign currency from individuals or companies, as this currency has been scrapped, which may see duty importation in FCA being relaxed but of course will likely be revised, to whatever rate, it will be cheaper.
However, the move will be a relief to most citizens though who will stop paying bills, fees and for services in USD they do not earn, forcing service providers to either revise rates, or stop in some cases, stop the service all together.
The biggest problem we have is the confidence issue, this move will never be positively received because skeptics of government lack confidence and rates will likely shoot.
The multi-currency regime was introduced by then Finance Minister Patrick Chinamasa towards the creation of Government of National Unity (GNU), a move which stabilized the economy during the entire GNU life spam.
This latest move deliberately puts us back to that era again, where good policies are meant to sustain an economy without any much production, the results are meant to be seen.