Veritas Slams Govt's Pricing Policy Shift, Says Ex...

Veritas Slams Govt's Pricing Policy Shift, Says Exchange Controls Remain Firm

Philemon Jambaya

Zim Now Editor

Legal think tank Veritas has challenged the government's assertion that its recent move to end official exchange rate-based pricing signifies a relaxation of exchange controls. According to Veritas, despite the repeal of Statutory Instrument (SI) 81A of 2024, which penalized businesses pricing above the official rate, the fundamental exchange control framework remains largely intact.

Two weeks ago, Finance, Economic Development and Investment Promotion Minister Mthuli Ncube introduced SI 34 of 2025, effectively allowing businesses to price their goods and services according to prevailing market dynamics, a departure from the previous mandate to adhere to the official exchange rate. Following this repeal, government and central bank officials suggested the move was a step towards liberalizing exchange controls.

However, Veritas, in its analysis, strongly refuted this claim, pointing to a potential procedural flaw in the enactment of SI 34 of 2025. The think tank highlighted Section 11(3) of the Exchange Control Act, which stipulates that before the Finance Minister publishes a statutory instrument amending the Schedule to the Act, he must present a draft of the instrument to the National Assembly, allowing seven sitting days for potential objections.

"So far as we can ascertain, the minister never did this. Members of the National Assembly whom we have contacted cannot recall him laying a draft of SI 34 of 2025 before the House and we cannot find a record of his doing so in the Assembly’s Votes and Proceedings," Veritas stated in its analysis. The implications of this alleged oversight are significant. "If indeed the minister did not table a draft of the SI in the National Assembly, that would render SI 34 of 2025 completely invalid," Veritas warned.

Beyond the procedural concerns, Veritas also raised a fundamental principle regarding the separation of powers. "Generally ministers should not be given the power to amend Acts of Parliament. It violates the principle of separation of powers, which states that Parliament should normally be responsible for enacting legislation, the judiciary responsible for adjudicating legal disputes, and the Executive (the President and ministers) responsible for administering the laws of the country," the think tank explained.

To genuinely relax exchange controls and facilitate a liberalized market, Veritas outlined the necessary steps the Finance Minister should take. "If the minister wants to allow businesses to use the market rate of exchange for pricing purposes, he should, without delay, publish a new SI specifically amending the Schedule to the Exchange Control Act to repeal the provisions inserted by SI 81A of 2024," Veritas advised. Crucially, they emphasized adherence to due process: "Before doing so, he should be careful to observe scrupulously the conditions laid down in section 11(3) of the Act, that is, to lay a draft before the National Assembly before publishing it."

Furthermore, Veritas suggested that Minister Ncube should task his officials with reviewing other existing orders and directions issued under the Exchange Control Act, citing SI 255B of 2000 and SI 223 of 2002 as examples. This review would aim to identify any further legal instruments that require amendment or repeal to fully align with the stated policy of liberalization. "He and his officials should remember that statutory instruments remain in force until they are repealed; they do not cease to exist simply because official policy has changed," Veritas cautioned.

In a stark warning to businesses, Veritas advised continued adherence to the official exchange rate for pricing. "In the meantime, businesses should continue using the official exchange rate when pricing their goods and services and should not rely on any assurances the minister may have given them that they can use a different rate." The potential consequences of disregarding this advice are severe. "If they use a rate other than the official one, they will be committing a civil infringement and, whether or not the Reserve Bank serves a civil penalty order on them, the prices they fix will be illegal – which means that if buyers default on payment the sellers will not be able to seek recourse through the courts," Veritas concluded.