The Reserve Bank of Zimbabwe (RBZ) has stopped the export/ diaspora remittance incentive scheme following the announcement to that effect in the recent monetary policy.
The RBZ introduced the incentive scheme that would see recipients of exports proceeds and diaspora remittances get a 3 percent incentive since when the bond notes came into circulation few years ago.
The RBZ gave directive stopping the incentive in it’s last monetary policy, and this has since come into effect. The paragraph 7.1 of the Reserve Bank directive states:
“In line with the new administrative arrangements … the Export Incentive Scheme, the Diaspora Remittance Incentive Scheme (DRIS) as well as export incentives that were being accessed by gold producers, cotton and tobacco growers, macadamia growers and horticultural producers, have been removed with effect from 21 February 2019.”
Zwnews.com yesterday visited Western Union branches and World Remit service providers, and spoke to some people who had just received diaspora remittances and indeed they confirmed that they did not get the incentive.
“I was surprised not to be given the 3 percent today. When I got some remittances last month it was there, so today I at first thought it was a mistake,” said one recipient who did not know the incentive was cancelled.
Another recipient who only identified herself as Ednah also expressed the same.
Meanwhile, constitutional watchdog Veritas Zimbabwe says the cancellation could have been illegal in that the parties were not notified of the cancellation.
All these incentive schemes were ‘removed’ the day after the Governor gave his monetary policy statement virtually without notice, in fact, according to the watchdog, this would be unconstitutional depending on the conditions.
“Whether incentive schemes like those mentioned in the directive can be cancelled without notice depends mainly on whether they amount to contracts between the government and the persons to whom the incentives are offered.
“If they are contracts and courts have held that such schemes are sometimes contracts then the government can cancel them only in accordance with contractual conditions impliedly agreed between the parties,” says Veritas.
“If they are not contracts then they usually can be cancelled, though the law often requires beneficiaries of the schemes to be notified in advance and invited to make representations about the cancellation. In such cases beneficiaries are regarded as having a “legitimate expectation” that their schemes will continue,” the constitutional body adds.
Veritas says while it has not seen the conditions of the incentive schemes cannot comment much on the validity of the cancellations, but hope the government and the Reserve Bank took competent legal advice before announcing the cancellations.
The statutory instruments issued to give effect to the new monetary policy may not be valid. The government should act quickly to put the policy on a firmer legal foundation, preferably through an Act of Parliament.
Veritas says in the same case, the registration of bureaux de change cannot be cancelled merely because the Reserve Bank has changed policy, and as such the cancellation of export incentive schemes may be illegal.
“All these issues suggest that while the government and the Reserve Bank may have expended a great deal of time and thought in constructing the new monetary policy, perhaps they should have paid more attention to the policy’s legal aspects,” says Veritas.
“One final point is that the task of assessing the legal implications of the new policy is made more difficult by the large number of exchange control instruments, regulations, orders and directives which remain on the statute book long after the policies they implement have been abandoned.
“The government and the Reserve Bank should remember that statutory instruments do not simply vanish when policies change: they remain in force until they are repealed, and if they are inconsistent with the new policies they may operate to subvert them.
“We urge the government and the Reserve Bank therefore to go through all the existing exchange control legislation, repeal whatever is outdated or unconstitutional and then re-enact whatever needs to be kept,” says Veritas.
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