9.5 C
Alba Iulia
Saturday, June 6, 2020

Problems with Central Bank’s take on Bill 10

Columns Problems with Central Bank's take on Bill 10

Bank of Zambia
Bank of Zambia

 

By Dr Grieve Chelwa

In July of this year I raised concerns with a proposed amendment to the functions of the Bank of Zambia (BoZ). The proposed amendments are contained in the infamous 2019 Constitution Amendment Bill (aka Bill 10).

Specifically, Bill 10 proposes to delete clause (2) of Article 213 of the current Constitution and replace it with a new clause. Article 213 (2) of the current constitution spells out BoZ’s functions as follows:

“(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.”

Bill 10 proposes that Article 213 (2) be replaced with:

“(2) The function of the Bank of Zambia is to formulate and implement monetary policy.”

The concluding section of my July blog post read as follows:

“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.”

Yesterday, BoZ issued a belated press statement seeking to explain the reasons for the proposed amendment. Below is an excerpt of the most important parts of their press statement:

“The proposed provisions relating to the Central Bank were motivated by the Bank which is of the view that the Constitution should only contain broad constitutional principles which are operationalised through detailed legislation passed by Parliament. In this regard, the Bank submitted proposals for amendment of the Constitution regarding the Central Bank’s functions to be restricted to the primary function, while additional functions, objectives and powers will continue to be subject of an Act of Parliament as envisaged under Article 215 of the Constitution of Zambia, Act No. 2 of 2016. The Bank has thus submitted to the Government that the primary function of the Bank should be to formulate and implement Monetary Policy. This submission is consistent with best practice on central banking and also complies with the SADC Model Law for Central Banks which stipulates that all Central Banks in the region should move towards adopting a single primary objective.”

BoZ’s press statement revealed that they are the originators of the proposed amendment.

Further, the proposed amendment, according to BoZ, has two objectives: 1. Maintain broad principles in the Constitution but have specifics spelled out in subsidiary legislation and 2. Bring the Bank’s “primary function” in line with “best practice” and in line with SADC Model Law for Central Banks.

I find the Central Bank’s motivations to be highly problematic and also confusing. First, the issuance of currency is no ordinary function such that its specifics can be left out of the Constitution. Relegating specifics about currency issuance to subsidiary legislation leaves it wide open to manipulation.

The requirements to amend subsidiary legislation are much less demanding than those required to alter sections of the Constitution. Suppose the specifics about currency issuance were only spelled out in subsidiary legislation such as the BoZ Act, nothing would stop a government with sinister aspirations from proposing an easily achievable amendment to remove this function from BoZ and give it to some other less competent entity. And these kind of things are very much possible given the current political context in the country. (It is also telling that the current proposed amendment is silent on where this function will now sit — BoZ is expectant in their statement that this function will sit with them but we all need to remember that BoZ does not make laws. That function is the preserve of the Legislature).

Second, BoZ argues in their press statement that they are proposing the amendments to meet “best practice” and SADC objectives. This is the bit that is confusing. The Constitution is a document meant for the people of Zambia and should only contain the aspirations of the people of Zambia and no one else. Any “best practice” or regional norms should be reflected in our Constitution to the extent that they are in line with our aspirations and our own unique set of circumstances. The latter point is important because the current political climate teaches us every day that we need to make our Constitution ever more specific in its contents rather than make it vague with dilutions. This may not be the case with other countries in SADC who might have better political contexts where such vagueness may not pose existential threats. In any case, the same of objective of satisfying “best practice” and SADC norms can still be met by spelling those out in subsidiary legislation and leaving the Constitutional provisions intact.

In a nutshell, I don’t find BoZ’s justifications convincing and I am still of the opinion that this proposed amendment should be withdrawn and Article 213(2) should remain as is.

Many countries have come asunder due to the careless handling of the printing press.

[Read 4,014 times, 1 reads today]

16 COMMENTS

  1. When people intend to do mischief they sit on vital information. It’s like somebody tells you that he’s shifting you from your house but doesn’t tell you where he’s taking you yet you’re hopeful that you’ll find a good life wherever you’re being taken. BoZ is in for a rude shock should Bill 10 go through

    • Our country unfortunately has been taken over and infiltrated by thieves everywhere. They are blinding us with religion, but are wolves. Ifyakulyo bushiku bafimwena kumalushi.

    • The anology is simple, these mappets have run out of ideas on how to effectively run the economy and have resolted to jungle economics never written in any book. BOZ to be formulating monetary policy only? Am I getting the gist of this gebberish? Simply put when you fail you go back to the drawing Board and make fresh plans. What we have at BOZ are PF surrogates with no iota of shame, to support such a bill is the worst for of incompetence and recklessness. Nonsense.

  2. I totally are on board with the article. Issues to do with currency printing and supervising banks are specific functions which require to be left intact in the constitution. Indeed the danger of saying the other arm of Government, will deal with specifics with regards to to your sector is dangerous. Should they decide in their collective wisdom that the supervision of banks will go to the Ministry of finance under treasury, BOZ can’t do anything! So when you still have a chance to leave the issues under your control intact, please do so. May be there is harm done which prompted you to remove these specifics other than sadcc best practices that we don’t know about? Communicate better to the country. And this is an amendment to the constitution which then can’t be done in this manner.

  3. “And I can’t see how another entity would logically takeover these functions, particularly the one to to with issuing currency. And the Draft Amendment Bill is silent on where the functions (a) and (c) will now sit.”

    Thank you Dr. Chelwa.This is what was expected of LAZ and other opponents of Bill 10 to question and submit to the Parliamentary Select Committee which was scrutinizing the Bill, the cons of the Bill.Instead LAZ and company rushed to Constitutional Court NOT to question the contents of Bill 10 as you have outlined above, but seek clarification whether or not the initiation of Bill 10 was in line with Article 92.I thought it was the lawyers duty and responsibility to scrutinize draft bills on behalf of citizens who may not be conversant with legal jargons?

  4. And true to your observation Dr,the lack of clarity on where functions (a) and (c) of BOZ ( of Article 213(2)) will now vested or rather be,is at variance with clause (5) which says:’ The Bank of Zambia shall not be subject to the direction or control of a person or authority in its performance of its functions.’

    Now in draft Bill 10,the functions( clause (2)) of
    BOZ are not clearly stated,how will BOZ enforce or exercise clause(5) without a clear constitutional mandate?

  5. I can see that the end of pf is in sight. All I pray for is that the pf uphold peace when vacating just as the mmd did in 2011. A sad end to an evil regime

    • Their only hope is good rains and filling of kariba.

      The other option most likely , knowing lungu , KZ and his gang is tormenting so much political violence then cancelling elections. This is a strong possibility. This is the route most likely to be taken.

  6. Lets all be diplomatic people,it seems the UPND cant function well without mentioning PF. He is like a key ingredient to their political recipe.Take it or leave it, PF will still stand beyond the 2021 elections fighting it wont solve and change the goal posts.Bill 10 never said bank of Zambia will no longer be in charge of regulating the printing of money,but they were spreading lies.

  7. There is need for government to explain to the ordinary people here in the country in a simple language what is happening to the constitution because a lot of people don’t understand what’s going on the whole country should be given a chance and time to look at this bill 10 the country needs more time for this change.
    What is happening it’s everything is just being done in a hurry to suit the needs of a few people who think Zambia is theirs you politicians don’t think Zambia is your property Zambia is not your father’s property you PF government you got bad intentions for our mother land you are busy raping this country and we are watching you.
    How can you say you want to be printing money yourselves and not Bank of Zambia you guys got appetite for stealing this is state capture…

Comments are closed.

- Advertisement -
Loading...

Latest News

Minister of Tourism Assures Artistes of Presidential Protection

Minister of Toursim and Arts has called for calm in the nation and in particular amongst artistes assuring them...

Freedom of Expression for Bloggers and Rogues?

By Isaac Mwanza Introduction Is it by accident that, all of a sudden, many Zambian Facebookers have discovered they can exercise their freedom of expression; That...

Expulsion of KBF from the ruling party has nothing to do with the upcoming party convention

PF Media Director Antonio Mwanza says the expulsion of Kelvin Fube Bwalya from the ruling party has nothing to do with the upcoming party...

President Lungu Blames UPND MP for the Bad Road Network in Rufunsa District

President Edgar Lungu says the road network in Rufunsa District has not been worked on because area Member of Parliament Sheal Mulyata has not...

Bill10 is the gravedigger of Zambia’s democratic tradition – Sishuwa

If passed into law, the Constitution of Zambia (Amendment) Bill Number 10 of 2019 would weaken institutions like elections and the constitution that offer...

More Articles In This Category

- Advertisement -
[Read 25 times, 1 reads today]