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Cash and property rights


Events unfolding in the financial and economic sector have cast the discussion of property rights back into the limelight and the extent to which they are recognised and protected in Zimbabwe. In April the Reserve Bank announced policy guidelines in line with the Bank Use Promotion and Suppression of Money Laundering Act Chapter 24:24. A litany of prescriptions were given such as maximum cash withdrawals and guidelines and warnings for business operations. Whatever the merits and demerits of the methodology and effect, the central bank is trying to intervene regarding the permanent cash shortages and bank queues that have become a normal way of life and a permanent painful scenery of the urban landscape. The Act itself is not new and has been in place since 2004. It was widely used in the years circa 2008 and it seems to have come full circle.


The best forgotten 2008 hyperinflationary era is remembered for excessive policing and monitoring of the business sector when businesspeople were routinely arrested for various alleged misdemeanours. Lawyers routinely advised their clients to always keep at least a warm jacket handy as they could be arrested at any time. This was good advice then and increasingly now as the winter and implementation of the policy have both started in earnest.
Anything can happen and, as it appears, history is repeating itself. At the end of April a Harare hardware store, Builders Home, was convicted and fined $17 000 for failing to bank cash. This has obviously raised red flags and sent shudders and tension in the business community. Businesses are compelled to bank cash for each business day and failure to do so is a crime.

Property and Real Rights

Property is best defined by its ordinary every day sense. It simply means a thing or things which belong to someone. When a thing belongs to someone the owner can and should be able to use the thing as they want. Their ownership should be protected by the law especially from arbitrary dispossession by anyone or even the State itself. That is the principle upon which the sacredness of property rights hinges. It should not be easy for anyone to take away private property or prevent an owner from possessing it or using it however they want as long as it is legal. In the Act property is defined as currency and all other real or personal property of every description whether situated in Zimbabwe or elsewhere, tangible or intangible and includes any interest in such property.
Section 71(2) of the Constitution states: Every person has the right in any part of Zimbabwe to acquire, hold, occupy, use, transfer, hypothecate lease or dispose of all forms of property either individually or in association with others.

Property rights pertain to the exclusive right of possessing something. Ownership denotes the concept of real rights. Real rights are absolute rights and are enforceable against the whole world. The property owner should be able to completely rely on the law to protect them whenever their ownership, control or possession is interfered with. Property rights laws prioritise the protection of property rights. When there is a culture of respecting private property rights there is consequent more investment in property and business. Investors and property owners need to be reassured that their property will be absolutely safe and that even if possession and control is disturbed for whatever reason they can rest easy and put total trust that any court of law will restore their real rights. They do not worry that government policies and laws can suddenly change and they wake up to realise that they do not own what they used to own and they have no recourse to the law. Business people do not want to have the cash they rely on to import stock seized by the State because they cannot get it from the bank they deposited it when they need cash for their survival.

Forced Banking

An examination of whether or not it is constitutional to force entities to deposit cash with banks is important.
References are made to various pieces of legislation and legal definitions given pertaining to the concept of property. Afterwards readers can to make up their own minds as to the legalities and constitutionalism of banking under duress. How lawful is it to keep large amounts of cash? How much cash is too much cash to keep? Is it lawful for the State to seize cash when cash constitutes private property? Is it necessarily money laundering to possess large sums of cash? If one wants to go to Sun City for a gambling weekend with their own United States dollars why should they not be allowed and only be permitted $1 000 which buys only a few bottles of their preferred drink? Is it constitutional to limit everyone’s freedom and property rights simply because the government is broke?

Freedom from banking?

Section 10 of the Act states that VAT registered traders, parastatals and money lenders should open accounts with a financial institution. Section 11 goes further to expressly compel them to bank all cash that is surplus to their requirements. It is illegal to keep cash in excess of $10 million without good reason. The cash has to be banked daily by the close of business or at least the next banking day. There is no argument that this is good for accounting and tax compliance. However, with the prevailing cash shortage situation it is difficult for businesses to survive when most of them depend on cash to import stock because they cannot get adequate cash from banks.
Foreign currency allocations and substantial cash withdrawals are given on a discretionary priority basis. These are real concerns for businesses survival and the RBZ policy did not seem address these concerns adequately.

Undeniably the Act compels businesses to use banks, meaning forced association, yet Section 58 of the Constitution prescribes freedom of assembly and association stating at that (1): Every person has the right to freedom of assembly and association and the right not to assemble or associate with others 58(2) No person may be compelled to belong to an association or to attend a meeting or gathering.

Similarly, Section 71(3) of the Constitution states: No person may be compulsorily deprived of their property. At the same time Section 33 of the Act allows for seizure and confiscation of cash for certain cash-detainable offences. We will discuss these offences next week and the constitutionality of some of the sections of the Act.

Miriam Tose Majome is a lawyer and a teacher. She can be contacted on enquiries@legalpractitioners.org

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