News / National
'Zimbabwe's ban on bank lending null and void'
11 May 2022 at 09:12hrs | Views
LEGAL experts have dismissed President Emmerson Mnangagwa's ban on bank lending as a legal nullity.
The ban, meant to stabilise the local currency, was part of a raft of measures announced on Saturday to arrest the economic challenges afflicting the country.
The Reserve Bank of Zimbabwe (RBZ) then enforced the measures in a statement on Monday, threatening to take action against non-compliant banks.
But some lawyers said banks were not obliged to heed the RBZ directive because there was no law that compelled them to comply with such measures.
"This is a shameful document by Zimbabwe's central bank. Since it knows the decree has no legal foundation it distances itself by calling it a ‘Presidential Announcement'. There is no legal instrument under Zimbabwe's laws called a ‘Presidential Announcement'," said United Kingdom-based lawyer Alex Magaisa.
"He could have used the Presidential Powers (Temporary Measures) Act even if that would still be controversial. But no, he couldn't be bothered. And here the central bank colludes in the law breaking by purporting to enforce the illegal decree. But the pliant banks will oblige."
The measures have been viewed as an attempt to tinker with the exchange rate as the local currency continues on a free-fall, amid rising inflation and skyrocketing prices of goods and services.
The announcement came at a time when there is a groundswell of discontent over rising poverty.
Mnangagwa, who came to power via a 2017 coup, has repeatedly said he was being sabotaged.
Lawyer Obey Shava said: "I understand that currently, there is no law giving effect to the President's national announcement of May 7, 2022. Banks are not legally obliged to act upon this RBZ directive."
Opposition Citizens Coalition for Change spokesperson and lawyer, Fadzayi Mahere added: "This decree is unconstitutional in its substance and ultra vires the law. You can't undo the entire law of banking, violate the constitutional right to trade and freedom of commerce - and do so by memo! If banks don't challenge this, it will be the end of banking law as we know it."
But in an interview with NewsDay, corporate lawyer Rodgers Matsikidze said the RBZ directive was binding unless challenged in the courts.
"Basically, what the President did was pronounce policies," Matsikidze said.
"The relevant procedure was that the relevant minister should have drafted the legal principles on the policies and submitted them to the Attorney-General.
"The President could have used the Presidential Powers Act to enact a law on economic policies. In the meantime, RBZ has proceeded to issue a statement on the announced measures and unless that is set aside by a court of law, it remains binding. RBZ is a regulator, so unless its directive is challenged at the court of law."
No comment could be obtained from Bankers Association of Zimbabwe chief executive Faunel Mutogo who said he was in a meeting.
The ban, meant to stabilise the local currency, was part of a raft of measures announced on Saturday to arrest the economic challenges afflicting the country.
The Reserve Bank of Zimbabwe (RBZ) then enforced the measures in a statement on Monday, threatening to take action against non-compliant banks.
But some lawyers said banks were not obliged to heed the RBZ directive because there was no law that compelled them to comply with such measures.
"This is a shameful document by Zimbabwe's central bank. Since it knows the decree has no legal foundation it distances itself by calling it a ‘Presidential Announcement'. There is no legal instrument under Zimbabwe's laws called a ‘Presidential Announcement'," said United Kingdom-based lawyer Alex Magaisa.
"He could have used the Presidential Powers (Temporary Measures) Act even if that would still be controversial. But no, he couldn't be bothered. And here the central bank colludes in the law breaking by purporting to enforce the illegal decree. But the pliant banks will oblige."
The measures have been viewed as an attempt to tinker with the exchange rate as the local currency continues on a free-fall, amid rising inflation and skyrocketing prices of goods and services.
The announcement came at a time when there is a groundswell of discontent over rising poverty.
Mnangagwa, who came to power via a 2017 coup, has repeatedly said he was being sabotaged.
Lawyer Obey Shava said: "I understand that currently, there is no law giving effect to the President's national announcement of May 7, 2022. Banks are not legally obliged to act upon this RBZ directive."
Opposition Citizens Coalition for Change spokesperson and lawyer, Fadzayi Mahere added: "This decree is unconstitutional in its substance and ultra vires the law. You can't undo the entire law of banking, violate the constitutional right to trade and freedom of commerce - and do so by memo! If banks don't challenge this, it will be the end of banking law as we know it."
But in an interview with NewsDay, corporate lawyer Rodgers Matsikidze said the RBZ directive was binding unless challenged in the courts.
"Basically, what the President did was pronounce policies," Matsikidze said.
"The relevant procedure was that the relevant minister should have drafted the legal principles on the policies and submitted them to the Attorney-General.
"The President could have used the Presidential Powers Act to enact a law on economic policies. In the meantime, RBZ has proceeded to issue a statement on the announced measures and unless that is set aside by a court of law, it remains binding. RBZ is a regulator, so unless its directive is challenged at the court of law."
No comment could be obtained from Bankers Association of Zimbabwe chief executive Faunel Mutogo who said he was in a meeting.
Source - NewsDay Zimbabwe
