HARARE – Businessman and lawyer Tawanda Nyambirai has become the second person to challenge the government’s move to ban the use of foreign currencies which followed the removal of a 1:1 pegging between the local RTGS currency and the United States dollar.
The Reserve Bank of Zimbabwe in February separated RTGS dollar and United States balances previously pegged at 1:1, effectively allowing the domestic currency to float. The local currency has plunged since, and was trading at 1:8.68 to the US dollar last Friday.
On June 24, the Reserve Bank renamed the new currency the Zimbabwe dollar and declared it the country’s sole legal tender – ending a decade of dollarisation.
Nyambirai says in court papers that the move to delink currencies back in February amounted to theft, and the subsequent moves to abolish the use of foreign currencies was illegal.
Godfrey Mupanga, a member of the group Zimbabwe Lawyers for Human Rights, petitioned the High Court on July 2 to reverse the decision to ban other currencies. Mupanga said the decision by the Finance Ministry and the Reserve Bank was “grossly unreasonable” and should be declared unconstitutional.
Nyambirai, in papers filed at the High Court on July 3, says “RTGS balances were actually United States dollar balances while bond notes and coins carried a promise to pay United States dollars on demand” before Statutory Instrument 33 of 2019 published in February in which “the Reserve Bank of Zimbabwe compulsorily converted Real Time Gross Settlement system balances that were in United States dollars… into RTGS dollars” while “bond notes and coins were also compulsorily delinked from the United States dollars.”
“The RTGS dollars ceased to be at par with the United States dollars after the effective date. Only persons with foreign obligations have been allowed compensation based on the principle that they will pay RTGS dollars for the US dollar obligations on an exchange rate of 1:1. By failing to provide for compensation to the holders of the RTGS balances and the bond notes and coins before their conversion to RTGS dollars, the Minister of Finance and Economic Development and the Reserve Bank of Zimbabwe compulsorily deprived me and the members of the public who were holding the RTGS balances, bond notes and coins of our property in contravention of Section 71(3) of the Constitution of Zimbabwe,” Nyambirai says in his court filing.
Nyambirai goes on to argue that the recently published Reserve Bank of Zimbabwe (Legal Tender) Regulations also known as Statutory Instrument 142 of 2019 decreeing that the country’s interim currency is the sole legal tender, with the exception of foreign payments, payments for import duties and payments for international airline services, are unconstitutional.
“The records of the RTGS balances that were converted to RTGS dollars need to be preserved and the Minister of Finance and Economic Development and the Reserve Bank of Zimbabwe need to be prevented from implementing any policies, rules or regulations that could affect the rights of holders of RTGS balances and the rights of holders of foreign currencies pending the determination of this matter,” Nyambirai pleads.
If Nyambirai’s application succeeds, it could potentially derail plans for a new currency.
In banning foreign currencies, Finance Minister Mthuli Ncube used regulations under emergency presidential powers, which lapse in six months unless parliament passes a substantive law.
Ncube told a parliamentary committee that dollarisation was throttling an economy grappling with shortages of United States dollars, fuel and bread, and 15-hour daily power cuts.
Many businesses had resorted to selling goods in United States dollars to protect them against near triple-digit inflation as the RTGS dollar was fast losing value before the government’s surprise intervention. – ZimLive