The Vanishing ZiG : Now it’s Here, Now it Isn’t

On Thursday last week the front-page headline in NewsDay, a daily newspaper, read:

“ZiG must go:  Business”

And NewsDay’s story began:

“Business wants the Zimbabwe Gold (ZiG) currency to be scrapped owing to its volatility …”

Well, perhaps their wish has been met, at least temporarily.

ZiG’s Origin

The Zimbabwe Gold currency (ZiG) came into existence on the 5th April this year when the President published a set of regulations, the Presidential Powers (Temporary Measures) (Amendment of Reserve Bank of Zimbabwe Act and Issue of Zimbabwe Gold Notes and Coins) Regulations, 2024 (SI 60 of 2024) [link].  The regulations amended the Reserve Bank of Zimbabwe Act to create the new ZiG currency.  More specifically, the regulations:

• permitted the Reserve Bank to issue ZiG notes and coins of specified design
• fixed the value of the ZiG against gold (though it has since been devalued)
• declared ZiG to be legal tender in all transactions and a unit of account in Zimbabwe.

ZiG’s Demise

The regulations which gave birth to ZiG were temporary, because section 6(1) of the Presidential Powers (Temporary Measures) Act states:

“Unless they are earlier repealed, regulations made in terms of section two shall expire and cease to have any effect immediately before the one hundred and eighty-first day following the date of commencement of the regulations.”

And section 7 of the Act goes on to say:

“… [W]hen any regulations made in terms of section two expire or are repealed, any law that was suspended, amended or modified by such regulations shall, with effect from the date of such expiry or repeal, have force in all respects as it existed before being suspended, amended or modified by the regulations concerned.”

Put simply, regulations made under the Act expire after 180 days and when they expire the law reverts to what it was before they were made.  In other words, the regulations legally vanish and anything the regulations may have done vanishes too.

Normally when the President makes regulations under the Act they are replaced with permanent legislation before they expire, usually an Act of Parliament, and the Act normally validates whatever was done under the regulations.  That was not done in this case.

On the 2nd September a Finance Bill was published in the Gazette which contains provisions re-enacting the President’s regulations in permanent form.  Unfortunately the Bill did not become law before the regulations expired on the 2nd October – in fact at the time of writing this bulletin the Bill has not yet become law.  Although it was passed by both Houses of Parliament and sent to the President for signature on the 15th October it has not yet been published as an Act of Parliament.

The upshot was that when the President’s regulations expired on the 2nd October, ZiGs ceased to be legal tender and in fact ceased to have any legal existence.  They still have no legal existence – they are dead.

ZiG’s Resurrection?

When the Finance Bill is eventually published ZiGs will become legal tender again, but it is not clear how far the Bill will be retrospective – i.e. how far the Bill’s provisions will apply to ZiG notes and coins already issued.  The main provision in the Bill, allowing the Reserve Bank to issue ZiG notes and coins, is not back-dated, though it fixes the value of the ZiG as at the 5th April – but that value is already out of date.  The Bill certainly does not take into account the fact that the ZiG ceased to exist on the 2nd October.

Conclusion

A clearer example of economic incompetence would be hard to find.  Here was a currency introduced with great fanfare, touted to become the sole legal tender in Zimbabwe and to replace the US dollar in all internal transactions – and the Government has let it vanish.

So, to refer back to the NewsDay article we quoted at the beginning of this bulletin, business may have got its wish.  But, as the saying goes:  Be careful of what you wish for.

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