The government says it's illegal to charge rentals in foreign currency

Anyone who has lived in Zimbabwe for the past three or so years knows that rentals are always paid in foreign currency even when they are not. Landlords, just like any business out there, base their prices in US dollars and then use the prevailing black market rate of the day to calculate what the tenant owes in Zimbabwean dollars. Everybody knows this is also against the law - a fact the Prosecutor General recently reiterated.

In a bristling lecture to the Herald, the Prosecutor General called people who charged rent exclusively in foreign currency economic saboteurs who were undermining the local currency which remained legal tender despite widespread rejection. He said the government would come after those who charged rent exclusively in foreign currency. PG Hodzi also acknowledged that this was a widespread practice with the sector essentially redollarising at a breakneck pace.

The thing though is this has been happening for the past three or so years as noted. At some point, landlords got tired of having to adjust rentals each month and simply decided to use a USD base. Also, the government’s official exchange rate is often viewed as “rigged” by the general public so prevailing market rates are often used when calculating what the rent for the month in Zimbabwean dollars is rather than using the official,often very low, rate.

It’s unlikely this practice will stop even after the prosecutor general threatened to come after those who are engaged in the practice. This is because everyone is doing it. Maybe not everyone in the literal sense of the word but you get the idea. It will simply not be feasible for the government to arrest and prosecute everyone. What you can expect is a few high profile cases will be mentioned in the media in the coming days or weeks before the justice regime moves on to another cause.

You can equate this to the whole “bond notes are a legal tender” argument we often hear from the government whenever a certain local currency denomination is demonetised. They scramble to force people to accept the said note before simply accepting the status quo. We saw this when bond coins were roundly rejected by the wider public police officers and the courts tried to force people to accept them. That did work. The same will probably happen here. 

This is mainly because the usage of the USD/foreign currency regime when calculating prices is not out of wilful desire to commit a crime but rather a practical solution to a pressing problem. It’s something borne out of necessity rather than a wanton criminal act.

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