Last week the government put forward a 10 page set of regulations, Statutory Instrument 213/2019 Presidential Powers (Temporary Measures) (Amendment of Exchange Control Act) Regulations, 2019 which effectively outlawed the pricing, transacting and quoting in foreign currencies. This was seen as the final nail in outlawing the use of US dollar pricing in the country. Earlier today the Reserve Bank took a further step to effectively outlaw cash out and cashback facilities from electronic and mobile money providers.
Forex pricing outlawed
SI 213 gave the Reserve bank the power to levy penalties on those found to be in contravention of the statutory instrument. The cruel irony of being given the power to punish people for a problem which one caused cannot go unnoticed. Section 3 clearly states that any party to a domestic transaction can only do so in Zimbabwean dollars.
“3.(1) Subject to section 4, no person who is a party to a domestic transaction shall pay or receive as the price or the value of any consideration payable or receivable in respect of such transaction any currency other than the Zimbabwean dollar.”
Section 4 lists transactions excluded such as transactions through banks. Section 5 exempts sales of petrol, diesel and other petroleum products to diplomats and staff of gazetted regional or international organisations at licensed fuel outlets.
A call back to a statement made by Reserve bank Deputy Governor Khupukile Mlambo lamenting the Reserve banks inability to control the parallel market for so long as they didn’t control all the forex in the country. This is a clear sign of where we are going and public outcry already fears a return to the overly regulated years that lead to the 2008 crisis.
Cash Outs Outlawed
In a directive issued earlier today, posted by the Financial Gazette on Twitter, the RBZ further moved to ban all cash in and cash-out transactions to mobile and electronic payments providers. This is a huge blow to the mobile money ecosystem which has for many years been the saviour to the cash shortages created by the Reserve Bank’s own activities.
In what can only be described as running out of ideas the move all but removes the utility of mobile money services, rendering money in mobile stuck there. While the scourge of selling of cash at a premium had certainly gripped the nation the RBZ itself should look within for causes of critical cash shortages. Preventing Cash-out is one thing but rendering the most dominant payment system in the country useless is quite another. We expect to see a lot of activity in the legal circles over this.
Meanwhile, the citizen is left to deal with the repercussions of these questionable decisions. Those operating businesses, who are also citizens, will also be hard hit by this as it seems government are intent on killing every last avenue of hope instead of dealing with root causes, which are within their purview.