Bond notes -a legal perspective

With respect, it is no answer as is suggested in the press statement, to contend that the bond notes are guaranteed by an “Afreximbank facility”. What is this facility? What law authorizes this approach? What does the “guarantee” mean? What are the terms of the Reserve Bank’s agreement with Afreximbank?

Is a person entitled, if the guarantee is a true suretyship as envisaged by the law, to approach this bank with the bond notes and redeem in their place United States dollars? If the answer is no, then there can be no substantive fairness in the decision.

It appears that the Afreximbank explanation is a smokescreen to lull the country into a false sense of security when what we have for all intents and purposes is a re-introduction of the Zimbabwe dollar, in circumstances where the economy is unable to shoulder such a burden.

Additionally, section 3 of the Administrative Justice Act demands that an administrative authority must give any person whose rights, interests or legitimate expectations may be affected by his decision “adequate notice of the nature and purpose of the proposed action”.

In this regard, it could be argued that in imposing cash limits on less than 24 hours notice, the Governor acted in breach of his obligation to act fairly. Procedural fairness, in particular the audialterampartem (hear the other side) principle enjoins the Governor to consult all stakeholders widely and to allow affected persons an opportunity to be heard before making a decision concerning their property.

It follows that the Governor has very likely acted in breach of his constitutional obligation to act fairly. It is no answer for the Governor to say that he had to ignore the obligation to give fair notice to avoid immediate cash withdrawals. The obligations imposed upon an administrative authority by the Constitution are peremptory and cannot be derogated from.

Reasonableness

The Governor’s decision has to pass the test of rationality. It can be argued that the decision of the Governor to introduce bond notes is not reasonable in view of the fact that the fundamentals that have led to the cash crisis, i.e. diminished productivity and our weak GDP have not at all been addressed.

No sensible policy has been put in place to improve our exports and thus reduce the trade deficit. No thought has been given to the prospect of a black market developing in order to circumvent the stringent policies.

If the concern is that certain foreigners e.g. the Nigerians and the Chinese are mopping up forex and externalising it, there has been no explanation as to why ordinary citizens have to be punished for this. The decision may also be said to be disproportionate in view of the corresponding harm that the new policies will create.

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