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Alba Iulia
Wednesday, February 19, 2020

Draft Amendment Bill seeks to Strip Away the Powers of Bank of Zambia to issue the Currency

Columns Draft Amendment Bill seeks to Strip Away the Powers of Bank of...

Bank of Zambia
Bank of Zambia

By Dr Grieve Chelwa

Like everyone else, I have been reading through the draft of Zambia’s 2019 Constitution Amendment Bill. The Bill, which is yet to be tabled in the National Assembly, proposes a host of amendments to the current constitution.

Many of the proposed amendments have been condemned by different sections of Zambian society including, and surprisingly so, the ruling Patriotic Front. One of the things that’s caught my attention in the Bill, and that hasn’t been touched on yet, is what appears to be a curtailment of the Bank of Zambia’s powers.

The memorandum that accompanies the Draft Amendment Bill from the Attorney General lists a series of objectives of the Bill. Objective (n) reads: “…to revise the functions of the Bank of Zambia“. Article 71 of the Bill spells out the exact revision that is sought as follows:

71. Article 213 of the Constitution is amended by the deletion of clause (2) and the substitution therefor [sic] of the following: (2) The function of the Bank of Zambia is to formulate and implement monetary policy.

However, clause (2) of Article 213 in the current Constitution, the clause to be replaced, reads [for completeness I am also reproducing clause (1)]:

213. (1) There is established the Bank of Zambia which shall be the central bank of the Republic. (2) The functions of the Bank of Zambia are to— (a) issue the currency of the Republic; (b) determine monetary policy; and (c) regulate banking and financial services, banks, financial and non-banking institutions, as prescribed.

So it seems that the Draft Amendment Bill seeks to strip away from the Central Bank the functions of issuing currency and the regulation of the financial sector.

These two functions are pretty core to what central banks do across the world. And I can’t see how another entity would logically takeover these functions, particularly the one to do with issuing currency. And the Draft Amendment Bill is silent on where functions (a) and (c) will now sit.

This is a strange amendment and one hopes that Members of Parliament will probe for details and justifications once the Bill is tabled in the National Assembly.

The Author teaches economics at the Graduate School of Business at the University of Cape Town. From 2016 to 2017 I was a postdoctoral fellow at the Center for African Studies at Harvard University. He holds a PhD in economics from the University of Cape Town.

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    • Listen to HHs recent press briefing where he highlighted this issue. The PF is a bunch of crooks trying to ride on the ignorance of the masses.

    • See HHs recent press conference where he addressed this issue. The PF is riding on the ignorance of the masses.

    • These fake authors, some of them should be arrested.
      How can he imagine that Zambians will be using fake currency printed by Kampyongo’s katondo street’s currency traders?

    • How can the institution like this one have the functionality changed without wider consultations. It is time there is wider consideration what can be changed without the wider national involvement.

  1. I don’t know why f$$lish ordinary people would support such a bill. There is nothing in it for the ordinary folks except for the so called politicians. What else is in this bill we don’t know about

  2. This draft bill has a lot of hidden agendas.No progressive clauses like appointment of ministers outside parliament given low quality mps.Sad

  3. Dr, you allude in your article that you dont know where (a) and (c) will sit in the amendment?

    I think the amendment is only on (b) determine monetary policy, and nothing to do with issuance of currency. Argument should be whether the current arrangement of BOZ determining is better off than having MoF determine?

  4. If the proponents of the Bill themselves are as divided as they are, you understand the level of confusion and mediocrity this country has been initiated into! So they want to be issuing the local currency and through their matrix of plunder be in charge of regulating the financial sector? And where is BOZ and all the financial GURUS of this country to argue the case out???

  5. It is just a matter of wording changed into one word rather than a,b,c formulating and implementing monitory policy is the rules banking and financial institutions will need to abide by. From that penalties or enforcement if one does not follow will in those documents. A little much more info perhaps other regulators would be proposed through the same eg formulating policy that governs the regulation of banks, the printing of currency etc just an example …

  6. Never in the history of this country have we had a government so arrogant and selfish as this one. They are extremely deceitful and always in a rush to mutilate the supreme law of our country. First they lied to us that the amendments were for refining the noticeable lacunae in the constitution when in fact their motive was to further their selfish ends. Trust me country men , we will have a confused state by the time PF are done with mother Zambia.

  7. ABK missed the point. The proposed amendment aims to repeal clause 2 entirely (including functions outlined under paragraphs (a) and (c) that relate to currency issuance and banking and financial services regulation respectively) and replace it with a new clause that redefines the functions to be: formulation and implementation of monetary policy. As such, Chelwa’s concern is very legitimate.

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