Residents welcome Govt decision on USD rates

Ivan Zhakata-Herald Correspondent

THE directive late last week by the Government that all local councils must continue charging in local currency as opposed to United States dollars as had just been announced by the Harare City Council, has been welcomed by residents.

Harare City Council tried to switch to US dollar rates collection from Saturday on two-days notice but had this illegal attempt shot down by the Government a day later, with it being made clear that the Zimbabwe dollar is the sole legal currency and that nothing can be billed in other currencies without special permission, which councils do not have.

Zimbabwe National Organisation of Associations and Residents Trust (ZNOART) national chairperson Mr Shalvar Chikomba said Treasury’s directive has been a welcome relief to residents. 

“We would like to stress to all Government ministries, departments and agencies as involved in local service provision that in principle the directive still stands,” he said. 

“We clearly understand viability and cost recovery in public service provision but it is surprising that the US dollar charges are across the board, regardless of whether or not the service has a foreign currency component. This is contrary to Section 13(c) of the Public Finance Management (General) Regulations and also contrary to the Treasury’s directive that directly grants ‘exceptional approval’.

“We see no justice for ‘exceptional approval’ as there has been poor and non-existent service delivery yet service providers management is always living large. The US dollar can be used but payment for services within councils has been directed to use Zimbabwe dollar equivalent at plus or minus 10 percent of the prevailing interbank rate published by the Reserve Bank of Zimbabwe according to SI of 118A of 2022.”

Mr Chikomba said they stood guided by two-way communication fundamentals which regard feedback as continuous and central to both councils and residents as enshrined in the Devolution and Decentralisation Policy of 2020. 

He said councils must engage residents first, get their approval and input in principle when intending to review an approved budget.

“Councils should not apply dollarisation clandestinely because there is no law in Zimbabwe that allows billing residents in US dollars when the budget was adopted in Zimbabwe. The switching of currencies is in contravention of Public Finance Management Act and amounts to budget tampering.”

The opposition CCC-led Harare City Council has been directed by the Government to stop charging rates in United States dollars, following a recent notice to the residents by the corruption-riddled local authority that starting from last Saturday it was now charging all rates and services in US dollars. 

Council made the announcement on Thursday so as to raise money to fund the cash-strapped CCC in the upcoming general elections slated for August 23 this year. 

Secretary for Finance and Economic Development Dr George Guvamatanga on Friday wrote to his Local Government and Public Works counterpart Mr Zvinechimwe Churu to order the Harare City Council to stop charging rates in foreign currency and comply with the relevant laws. 

Dr Guvamatanga said the charging in US dollars by the City of Harare was unlawful and contravened monetary laws. 

The letter was also copied to the Minister of Finance and Economic Development, Professor Mthuli Ncube and the Chief Secretary to the President and Cabinet Dr Misheck Sibanda. 

“As you are aware, secretary in 2019, Government adopted the use of the Zimbabwe dollar which was introduced in February 2019 through the Presidential Powers (Treasury Measures) (Amendment of Reserve Bank of Zimbabwe Act and Issue of Real Time Gross Settlement Electronical Dollars (RTGS Dollars)) Regulations, 2019 published in Statutory Instrument 33 of 2019,” Dr Guvamatanga said. 

“In June, Government published the Reserve Bank of Zimbabwe (Legal Tender) Regulations, 2019 published in SI 142 of 2019. The provision of SI 142 of 2019 provides that subject to section 3, with effect from 24 June 2019, the British pound, United States dollar, South African rand, Botswana pula and any other foreign currency whatsoever shall no longer be legal tender alongside the Zimbabwe dollar in any transaction in Zimbabwe. 

“Accordingly, the Zimbabwe dollar shall, with effect from June 24 2019, but subject to section 3, be the sole legal tender in Zimbabwe in all transactions. For avoidance of doubt, it is declared that references to the Zimbabwe dollar are coterminous with reference to the following and to no other forms of legal tender or currency: the bond notes and coins referred to in section 44B of the Act and, the electronic currency prescribed for the purpose of section 44C of the Act, that is to say to the RTGS dollar.”

Dr Guvamatanga said in terms of the provisions of SI 142 as incorporated in the Finance (No.2) Act, 2019, the Zimbabwe dollar is the sole legal tender for all settlements within Zimbabwe. 

He said any billing for services in foreign currencies can only be done if provided for by law or if exempted in terms of the Exchange Control Regulations. 

“As you are aware, transactions which are excluded from the scope of domestic transactions are provided for in the Exchange Control (Exclusive Use of Zimbabwe Dollar for Domestic Transactions) Regulations, 2019 within the scope of the definition of “domestic transactions” provided in subsection (1) of that Statutory Instrument and the billing of rates by local authorities is not listed therein,” Dr Guvamatanga said. 

“Pursuant to this, in March 2020, Government published SI 185 of 2020 which in section 2 (2) provides that any person with free funds may elect to pay for goods and services chargeable in Zimbabwe dollars, in foreign currency using his or her free funds at the ruling rate on the date of payment. The payment in foreign currency by any person paying for goods and services should be his or her option unless otherwise exempted and cannot be compelled to pay in foreign currency. 

“The charging and billing in United States dollars by the City of Harare or any local authority is unlawful and contravenes the cited laws. As city councils fall under your purview, may you ensure that all local authorities comply with the relevant laws.”

Council last week issued a statement notifying residents that starting on Saturday it would be charging all the rates and council services in US dollars. 

“Notice is hereby given to all residents and stakeholders of City of Harare that effective 1 July 2023, the council bill will be denominated in US dollars and all outstanding arrears as at 30 June 2023 will be converted to US dollars using the prevailing exchange rate,” council said. 

Residents expressed concern over the CCC-led council’s move saying they wanted to cause panic among residents ahead of elections. 

They said Government ministries, departments and agencies as well as local authorities stand guided by a directive dated September 1, 2022 from Treasury to collect all fees and levies in Zimbabwe dollars only, except where specified.

Mrs Charity Mudavanhu of Warren Park 1 in Harare thanked the Government for barring council from charging in US dollars since many people still earn Zimbabwe dollars from their jobs and other activities.

“Where do people get the US dollars when they earn Zimbabwe dollars? This was an unfair decision because people do not have the US dollars. In any case, the council is failing to provide water and collect refuse yet they wanted to charge rates in foreign currency. This is totally absurd,” she said.

Ms Chenai Hamutendi also said: “Council is now trying to shift its attention to looting. From 2009 to about 2018 when they were collecting US dollars for rates, there is nothing tangible they did with the money.

“In fact, that is the time when service delivery hit rock bottom as the opposition officials were looting every cent they got. Now, with elections coming up next month, the opposition councillors now want to steal whatever they can lay their hands on. We have heard of some councillors invading tuckshops run by ordinary people in high density areas and pronouncing themselves as the new owners. They are now taking all the rentals that tuckshop owners were paying to the previous owners.

“And by demanding forex payments now, clearly, these people wanted residents to turn against the ZANU PF Government and therefore not vote for them. Whenever they do something that punishes the residents, they blame ZANU PF, and we don’t know when they will acknowledge they have failed. Before charging rates in US dollars, they must provide us safe and clean water first.”

Mr Moses Choto thanked the Government for blocking the move.

“I think this is politics at play by the CCC-led council, but at least I am happy that the Government has since intervened to ensure people pay rates in the currency they get the most,” he said.