I’ve recently heard about a new directive from the Reserve Bank of Zimbabwe. Announced in RBZ Governor Gono’s July Monetary Policy Statement, it effects sellers of immovable property such as real estate.

A synopsis by MBCA Bank Limited explains the directive, but the notice on the Seeff home page draws more question marks around it, in terms of it not being written down formally or gazetted in a Statutory Instrument.

Effectively, the new policy required home sellers to wait a year before they can access the proceeds from selling their property. During that year, the money goes into a special “FCA Property” account. I’ve heard some estate agents argue that the new regulations “aren’t so bad.” You can access $50,000 of the value immediately, you can earn interest on the funds in the meantime, and you can access them if, for example, you have sold one house to buy another, or if you need to pay for things like school fees or other services locally or internationally.

But looking back at the past decade of Reserve Bank autonomy – and the impunity with which it printed money, financed pet-projects and engaged in quasi-fiscal activities such as car purchasing, it’s very difficult not to be cynical.

Surely if I sell my asset, the proceeds from this sale (barring perhaps something like a capital gains tax) are mine? No doubt since the switch to the US Dollar, the Reserve Bank has been short of work. Is the RBZ not trying to just divert all property sale proceeds through itself so it can keep some operating funds, have to fire fewer people,  and try and keep itself afloat a little bit longer?

I’m surprised not to have heard more about this. Maybe it isn’t actually as outrageous a move as it sounds? Or maybe  property sellers are such a small pool, the RBZ knows it can target them in this way without too much fall out? But if Zimbabwe is serious about trying to rebuild its economy and attract investment, surely the idea should be to make the transaction environment more free, rather than more restricted? It sounds like one rationale behind this new regulation is that buyers and sellers have been moving off shore without the Zimbabwean economy benefiting from these transactions at all. I agree that’s problematic – but with a history of the RBZ seizing assets, freezing accounts, and redirecting funds for its own purposes, is there any wonder investors are reluctant to keep their funds here? Surely moves like this one make it even more difficult to recover, rather than less?

Informed opinions about the legality of this move by the RBZ, and what it means for the Zimbabwean economy, are most welcome.

This entry was posted on September 12th, 2011 at 1:31 pm by Amanda Atwood and is filed under Economy, Governance. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.