Commercial Farmers' Union of Zimbabwe

Commercial Farmers' Union of Zimbabwe

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Proposed RBZ law bad for business

‘Proposed RBZ law bad for business’

Thursday, 17 March 2011 15:09

Paidamoyo Muzulu

LAWYERS have slated the General Laws Amendment (GLA) Bill that seeks to give 
immunity to Reserve Bank of Zimbabwe property from execution for the $1,2 
billion debt the bank largely accrued during its quasi-fiscal activities 
between 2003 and 2008.
Clause 13 of the Bill seeks to give protection to the central bank’s movable 
assets, which could be attached to offset the mammoth debt. This is the same 
privilege enjoyed by state property under the State Liabilities Act.

Scanlen and Holderness senior partner, Sternford Moyo, said the proposed law 
would be an affront to the rights of individuals and companies seeking legal 
redress for unpaid debts owed them by the central bank.

Moyo said: “Immunity from execution is contrary to fundamental values which 
are enshrined in our Constitution, namely: equality before the law and the 
right to access to justice.”

The Bill proposes that the State Liabilities Act [Chapter 22:13] applies, 
with necessary changes to address legal proceedings against the bank, 
including the substitution of references therein to a minister by references 
to the (Reserve Bank) Governor.

Dube, Manikai and Hwacha Legal Practitioners senior partner, Selby Hwacha, 
concurred with Moyo that the legislation was bad for business. He said the 
proposed law would make the business operating environment unfriendly and 
people will fear entering into commercial transactions with the central bank 
in future.

Already, minerals auditing firm, Alex Stewart International (ASI), is suing 
the central bank for US$34,99 million over unpaid fees for services rendered 
between 2007 and 2009.

If the Bill goes through in its current form, this may mean the company may 
never be paid, a precedent that will prevent such well respected 
international firms from doing business with Zimbabwe, or to demand upfront 
payments or high deposits, something that the country can ill afford.

The Bill is currently before the Parliamentary Legal Committee for scrutiny 
to check if it conforms to the Constitution before its second reading that 
could be anytime, once the committee gives it the green light.

The lawyers argue that State Liabilities Act was a remnant of the time when 
kings ruled their realms with iron fists and were considered infallible and 
hence could not be sued. The notion is inherently inconsistent with the 
modern principle of equality before the law, which requires that every 
person, including the State, is equally subject to the law.

“Access to justice is rendered nugatory if the court order obtained cannot 
be enforced against the State or central bank,” Moyo pointed out.

The Bill was introduced to stop execution of court judgments against the 
bank. Among the creditors who had taken the bank to the courts was Farmtech, 
owed US$2,1 million for providing tractors for the state’s land reform 

The central bank owes creditors a combined sum of nearly $1,2 billion, with 
the majority of debts incurred during the era the bank was involved in 
quasi-fiscal activities. Most of the money was used for farm mechanisation, 
irrigation infrastructure and vehicle procurement for the state.

In a similar case, the South African Constitutional Court in 2007, in 
Dingaan Hendriek Nyathi vs Member of the Executive Council for the 
Department of Health, Gauteng and Minister of Justice and Constitutional 
Development and Others, case CCT 19/07, found State immunity from execution 
to be unconstitutional.
Finance minister Tendai Biti last month told Parliament the government had 
started the process of restructuring the Reserve Bank, including its 

“We are looking at creating a special purpose vehicle to house the bank’s 
debts. This will entail disposal of all businesses linked to the bank’s 
quasi-fiscal operations and creditors will be paid a dividend per dollar 
owed,” Biti said.
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