[25th April 2025]

Relaxation of Exchange Controls? Not Really

On the 15th April the Minister of Finance, Economic Development and Investment Promotion published statutory instrument 34 of 2025 in the Gazette with a rather convoluted title:  the Exchange Control (Amendment of Schedule to the Exchange Control Act) (Repeal) Notice, 2025.  The instrument, which for convenience we shall refer to as just SI 34 of 2025, can be accessed on the Veritas website [link].  It repeals an earlier notice, SI 81A of 2024, which can also be accessed on the website [link].

According to press reports, the effect of SI 34 of 2025 is to repeal an earlier law that required businesses to abide by the official exchange rate when pricing goods and services.  As a result of the repeal, the press reports suggest, businesses will be able to use the market rate between US dollars and ZiGs for pricing purposes.  Business leaders have welcomed the reform, saying it is a positive and long overdue move which will remove a very big distortion in the marketplace.

Unfortunately, their enthusiasm is misplaced.  SI 34 of 2025 does not change anything.  The law remains as it was.  To explain why, we need to give a bit of the background to the SI.

Background to SI 34 of 2025

The Exchange Control Act has a Schedule dealing with civil penalty orders, i.e. orders issued by the Reserve Bank imposing penalties for “civil infringements” which are set out in paragraphs 2 and 3 of the Schedule.  Section 11 of the Act gives the Minister of Finance power to amend the Schedule by statutory instrument, but before doing so he must comply with subsection (3) of the section;  that is to say, he must lay a draft of the instrument before the National Assembly and give the Assembly seven sitting days to decide whether to pass a resolution that the instrument should not be published.  If the Assembly does not pass such a resolution, then the Minister must publish the instrument in the Gazette.

Paragraphs 2 and 3 of the Schedule, as we have said, set out various civil infringements that may be the subject of civil penalty orders.  In May last year the Minister published SI 81A of 2024, which:

  • created a new civil infringement consisting of offering goods or services at an exchange rate above the prevailing average interbank foreign currency selling rate published by the Reserve Bank, and
  • provided for the civil penalty that can be imposed for the new infringement.

Now the Minister has published SI 34 of 2025, which simply states:

“The Exchange Control (Amendment of Schedule to the Exchange Control Act) Notice, 2024, published in Statutory Instrument 81A of 2024, is hereby repealed.”

The instrument does not explain what the Minister intended to achieve, but presumably he wanted to abolish the civil infringement created by SI 81A of 2024.  If so, he did not succeed, for two reasons.

SI 34 of 2025 Was Not Properly Enacted

We have already explained that before the Minister publishes a statutory instrument amending the Schedule to the Exchange Control Act, he must allow the National Assembly seven sitting days within which to object to a draft of the instrument.  This is laid down in section 11(3) of the Act.

So far as we can ascertain, the Minister never did this.  Members of the Assembly whom we have contacted cannot recall him laying a draft of SI 34 of 2025 before the House, and we cannot find a record of his doing so in the Assembly’s Votes and Proceedings.  [When papers are laid before the Assembly, i.e. tabled, that fact is noted in Votes and Proceedings]

If indeed the Minister did not table a draft of the SI in the National Assembly, that would render SI 34 of 2025 completely invalid.  Generally it is undesirable for Ministers to be given power to amend Acts of Parliament:  it violates the principle of separation of powers, which states that Parliament should normally be responsible for enacting legislation, the judiciary responsible for adjudicating legal disputes, and the Executive (the President and his Ministers) responsible for administering the laws of the country.  In at least one case in this country the High Court has held that a statutory provision which gave a Minister power to amend an Act of Parliament violated section 134 of the Constitution because it amounted to a delegation of Parliament’s primary law-making power.  This means that if Parliament has laid down conditions giving itself power to scrutinise and veto a Minister’s proposed amendments to an Act of Parliament (and Parliament has done just that in section 11(3) of the Exchange Control Act), those conditions must be observed scrupulously. 

If, as seems to be the case, the Minister did not observe the conditions laid down in section 11(3) before publishing SI 34 of 2025, then the SI is void.

Anyway, SI 34 of 2025 is Ineffective

Even if it turns out that SI 34 of 2025 was laid before the National Assembly, it is completely ineffective in its presumed aim of allowing goods to be priced according to market rates of exchange.

As we have said, all SI 34 of 2025 does is to repeal an earlier SI which amends the Schedule to the Exchange Control Act.  In other words, SI 34 of 2025 does not itself amend the Schedule, it simply repeals an earlier SI that amended the Schedule.  This does not have the effect of repealing the earlier amendment, because when an enactment amends another enactment the amendment is incorporated into the enactment being amended (the parent Act) and becomes part and parcel of it.  Once the amendment has been incorporated, the amending enactment can be repealed without affecting the parent Act.  This principle was expressed rather picturesquely by a court in India, where the law on the point is the same:

“The purpose of an amending Act is to plant the necessary amendments in the parent or the main Act, and once such planting has been effected, the planting Act (the amending Act), having served its purpose need not any more remain there to tend the plant, as it were;  the plant has taken root in the main Act.  … [I]f an amending Act is … repealed by a repealing Act, the amendment does not affect the plant, the amendment already planted in the main Act.”

So even though the Minister may have repealed his earlier SI – SI 81A of 2024 – the amendments made by that earlier SI remain in the Schedule to the Exchange Control Act.  Hence it is still a civil infringement for businesses to price their goods and services using an exchange rate different from the official one.

Conclusion

If the Minister wants to allow businesses to use the market rate of exchange for pricing purposes, he should without delay publish a new SI specifically and clearly amending the Schedule to the Exchange Control Act so as to repeal the provisions inserted by SI 81A of 2024.  Before doing so he should be careful to observe scrupulously the conditions laid down in section 11(3) of the Act, i.e. to lay a draft before the National Assembly prior to publishing it.

The Minister might also consider getting his officials to look at other orders and directions made under the Exchange Control Act – SI 255B of 2000 [link] and SI 223 of 2002 [link] for example – to see if they need amending or repealing in order to give effect to the new policy of liberalisation.  He and his officials should remember that statutory instruments remain in force until they are repealed;  they do not cease to exist simply because official policy has changed.

In the meantime, businesses should continue using the official exchange rate when pricing their goods and services, and should not rely on any assurances the Minister may have given them that they can use a different rate.  If they use a rate other than the official one they will be committing a civil infringement and, whether or not the Reserve Bank serves a civil penalty order on them, the prices they fix will be illegal – which means that if buyers default on payment the sellers will not be able to seek recourse through the courts.