Bond notes -a legal perspective

Applicable Law

The office of the Governor of the Reserve Bank of Zimbabwe is established in terms of section 14(1) of the Reserve Bank of Zimbabwe Act [Chapter 22:15]. In terms of section 68 of the Constitution, the supreme law of the land, every (Zimbabwean) person has a right to [administrative] conduct by the Reserve Bank Governor that is inter alia lawful, reasonable, proportionate and both substantively and procedurally fair.

His constitutional duty in this regard is echoed in section 3(1) of the Administrative Justice Act [Chapter 10:28]. According to section 3(1) of the Administrative Justice Act, “an administrative authority which has the responsibility or power to take any administrative action which may affect the rights, interests or legitimate expectations of any person shall act lawfully, reasonably and in a fair manner.”

The term “administrative authority” is defined in section 2 of the Administrative Justice Act to include any person authorised by any enactment to exercise or perform any administrative power or duty.

The Reserve Bank Governor, being the officer responsible for the day-to-day management, control, administration, operation and direction of the Bank in terms of section 19 of the Reserve Bank of Zimbabwe Act, falls neatly within the definition of an “administrative authority”.

The Governor is therefore subject to the provisions of section 68 of the Constitution and section 3 of the Administrative Justice Act.

Applying the above legal provisions to the contents of the Governor’s press statement, I am of the respectful view that his decisions and conduct offend our constitutional right to administrative justice.

Lawfulness

Section 68 of the Constitution as read with section 3 of the Administrative Justice Act require the Governor to act in a lawful manner. It is established under our law that all administrative powers, including those of the Governor, must derive from statute and the nature and extent of those powers are to be found in the statutory provisions granting these powers. 

Simply stated, this means that there has to be a legal basis, in Statute or delegated legislation for any decision that the Governor makes. The question to be asked is: what law authorizes the Governor to create “bond notes”, which bond notes then replace lawfully deposited US dollars.

It is worth highlighting that the term “bond note” is not defined anywhere in the Reserve Bank Act or the Banking Act [Chapter 24:20]. “Bond note” is not a term of conventional economics but an invention on the part of the Governor.

It is clear that the law does not empower the Governor to create this, with respect, fictitious money.

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