Zimbabwe enforces exclusive use of Zimdollar for domestic transactions

Zimbabwe enforces exclusive use of Zimdollar for domestic transactions
Published: 28 September 2019
Government has reinforced legislation which formalised the use of local currency by empowering the Reserve Bank of Zimbabwe (RBZ) to issue civil penalties for contravention and also applying criminal sanctions in extreme cases.

This comes as Government itself had undermined its own policy through various exemptions it was giving to businesses while generally some businesses had slipped back into accepting the US dollar due to the continuous depreciation of the local currency.

Statutory Instrument 212 of 2019 enforces the exclusive use of the Zimbabwe Dollar (ZWL) for domestic transactions of good and services in Zimbabwe under the Exchange Control Act. Under the SI, which was released yesterday, it is now illegal to sell, offer for sale, quote, display, charge, receipt and pay for goods and services in US dollars.

The previous legislation, SI 142 of 2019, which formalised and made the local dollar the only legal tender had certain loopholes that did not specifically forbid contracts that require payments to be made or calculated in a foreign currency. If shopkeepers marked their prices in US dollars, say, or insist on payment in that currency there was nothing to stop them from doing so.  

However, with SI 212, Government has made it illegal to price in any other currency other than ZWL with contravention subject to civil penalties, which shall be enforced by the RBZ as pronounced in SI213 of 2019. Under SI213, the RBZ now has power to issue civil penalties for contravention of the amended Exchange Control Act. The penalties are from category 1 to 5 depending on the case and will be enforced through a bureaucratically written order.

There are however exceptions to the exclusive use of the dollar. Foreign currency payments will still be required for foreign registered vehicles on carbon tax payments, road access fees and third party insurance, for electronic sealing fees and fines charged by or to transborder logistic enterprises or transborder electronic or tagging enterprises, for payments to local insurance companies for bond guarantees or bonds for designated goods and for payment by foreigners in transit of deposits in terms of any law.

Luxury goods (designated goods) will continue to pay duty in foreign currency while Government will also allow individual travellers the option to pay duty in foreign currency even if the goods are not designated goods.

Other transactions, which can be quoted in foreign currency include those conducted through authorised dealers for which payments are permitted to be made in foreign currency as pointed out in section 35 of the exchange control directive.
- finx
Tags: Zimdollar,


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