The enactment of statutory instruments (SIs) in Zimbabwe is now a norm. I have literally lost count of the number of SIs that have come onto the scene since around 2019 to date. Interestingly this has somehow created a widespread consciousness of the law amongst Zimbabweans. On the other hand, I also feel it has given rise to legal contradictions and ambiguities as well. Anyways, we now have SI 127 of 2021 which looks at forex and exchange rate related issues for Zimbabweans businesses. I will be doing an overview of that statutory instrument in this article.
RBZ Forex Auction Regulations
The SI stipulates that companies or businesses applying for foreign currency at the auction must specify what they intend to use the money for. If it is found out that they are using the money for purposes other than initially indicated, they will be guilty of an offence. There will be a fixed fine or penalty of ZWL$1 million. In some cases, it might be the equivalent value of the foreign currency they would have misused. Whichever is higher between the two is what they will pay as a fine. The SI actually reads as:
“One will be guilty, if he or she without Exchange Control authority, uses the foreign currency obtained directly or indirectly from a foreign exchange auction or an authorised dealer for a purpose other than that specified in the application to partake in the auction or the application for foreign currency.”
Banks have got to be more diligent now. When a client makes an application for foreign currency to their bank they of course submit the relevant details. If the details are found to be false, the bank will be found liable. They will find themselves faced with a ZWL$5 million fine. Thus banks must be extremely thorough in handling such applications by their clients.
Charging Of Goods By Businesses
It is considered a crime to insist only on foreign currency payments and refuse local currency payments. Furthermore, the local currency payments are expected to be the equivalent of the foreign currency amount using the official exchange rate (not the parallel market exchange rate). Selling stuff using an exchange rate above the official rate (something virtually all businesses are guilty of) now attracts a fine.
Deliberately putting a premium or hefty mark-ups on local currency prices to encourage customers to pay using US dollars is considered illegal. It is also illegal to discount customers for paying in US dollars. Let us suppose someone pays using foreign currency and you receipt them in ZWL$, that is a crime.
Any business found contravening these regulations will be found guilty of an offence. They will be expected to pay a fine of ZWL$50 000. If the equivalent amount of the foreign currency charged is higher than ZWL$50 000, that is what they will pay as a fine. So businesses have to be very careful now because customers can report you. Bear in mind that if found wanting you will have 2 days to appeal.
You would have to convincingly prove that you were not guilty of any offence. If the appeal does not take root, you will be expected to pay the fine. If you fail to pay the fine, a 5 per cent interest will be added for each day that passes by. This will be applicable for a duration of 90 days. If the 90 days come and go and you still have not managed to settle your fine, you will be slapped with a 6-month jail term.
So, consider yourself warned; you would not want to find yourself at loggerheads with the law. The Consumer Council of Zimbabwe has been doing some enforcement operations lately. It is wise to always have your things in order. Get some time to familiarize yourself with the Consumer Council regulations so that you operate your business lawfully in every regard. Additionally, take time to also familiarize yourself with SI 127 of 2021 that I have summarized in this article. Remember it is all about empowering and protecting the consumer so know that it is those same consumers who can report you; be careful!