The Finance Ministry Secretary, George Guvamatanga, has blocked a move by the Harare City Council (HCC) to start billing its clients in US dollars. The council had recently announced that it would begin charging its services in foreign currency from July 1, 2023, to preserve value for money and hedge against inflation. The council said:
The need to preserve value against rate losses has necessitated this move. City of Harare thanks its valued residents for the support in funding service delivery through payment of rates and other services.
However, Guvamatanga has described the proposal as unlawful, stating that it violates Statutory Instrument (SI) 142 of 2019. The SI prohibits the use of foreign currency for domestic transactions, except if provided for by the law or if exempted in terms of the Exchange Control Regulations. He further explained that any person with free funds may elect to pay for goods and services chargeable in Zimbabwe dollars, in foreign currency using their free funds at the ruling rate on the date of payment. Guvamatanga has ordered the HCC to withdraw its notice and comply with relevant laws. He said:
Under this, in March 2020, the government published SI 85 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 at his/her option unless otherwise exempted and cannot be compelled to pay in foreign currency.
The charging and billing in US dollar by the City of Harare or any local authority is unlawful and contravenes the above-cited laws. As the city council falls under your purview, may you ensure that the City of Harare withdraws its notice and all local authorities comply with relevant laws. Be guided accordingly.
The Zimbabwe dollar has seen a major decline in recent months due to inflation, foreign currency shortages, and a lack of trust in the government’s economic policies. This has negatively impacted the population’s purchasing power and access to essential goods and services. Some businesses have refused to accept the local currency due to its volatility. The government has attempted to stabilize the economy and currency, but with limited success thus far.