The Reserve Bank of Zimbabwe (RBZ) has frozen the City of Harare’s bank accounts after the local authority started charging for services in US dollars.
The central bank’s Financial Intelligence Unit (FIU) has since widened its investigations into city councils charging for services in foreign currency.
Harare City Council had demanded residents pay for services such as house-planning permission in US dollars to enable the municipality to pay for fuel and workers’ salaries.
Speaking to Bloomberg by phone, FIU Director-General Oliver Chiperesa said they are investigating two other municipalities over the practice. He said:
There are two other authorities which we are looking to see if they have adhered to our approaches.
The Zimbabwean dollar is Africa’s worst-performing currency this year. It has lost more than four-fifths of its value this year.
Meanwhile, City of Harare spokesman Innocent Ruwende said the FIU’s decision to freeze the council’s accounts was “unfortunate” and may impact the municipality’s ability to deliver services. He said:
The decision is detrimental to service delivery. We need foreign currency to pay for fuel, plant equipment and workers’ salaries.
It’s an unfortunate decision that’s been taken by the Reserve Bank of Zimbabwe.
Chiperesa said the law empowers them to freeze bank accounts for 90 days to allow for investigations to take place.
He added that a possible way for the council to resolve the situation is for it to stop the demands for foreign currency payments.