Clause 23: Removing reference to “foreign organizations or entities” from the provision entitling Parliament to approve or veto agreements concluded with non-State institutions, e.g. foreign banks.
What does the Constitution say now?
Section 327 of the constitution outlines the role of Parliament in approving treaties and other fiscally binding agreements made between the GoZ and other international parties. In particular, Section 3 states:
3. An agreement which is not an international treaty but which —
a. has been concluded or executed by the President or under the President’s authority with one or more foreign organisations or entities; and
b. imposes fiscal obligations on Zimbabwe;
does not bind Zimbabwe until it has been approved by Parliament.
Essentially, the Government of Zimbabwe may enter into a range of agreements that have some financial implications. These might include with other sovereign states (e.g. South Africa – in agreements over use of electricity for example), international bodies (e.g. IMF or SADC – whose members are internationally recognised States) and ‘foreign organisations’ that are non-state based but may be based in a particular country/ies (e.g. Africa Export-Import Bank (AfreximBank)).
At the moment ALL of the above agreements are subject to parliamentary oversight and may be vetoed by parliament if found to be burdensome to the country’s financial status. This provision also aligns with Section 300 which permits Parliament to set limits on State borrowing and spending.
What will change if the amendment is approved?
The amendment will replace the term ‘foreign organisation’ with ‘international organisation’ in the above mentioned clause. In doing this, it will limit Parliament’s oversight of agreements concluded between GoZ and only those made with other nation states and “international organizations”, i.e. organizations whose members include independent States.
It will create a loophole for government to enter into agreements with non-state institutions, such as foreign banks, without parliamentary approval, oversight or veto power.
Does it matter? If so, why?
Legislation watch-dog Veritas notes that this is an amendment of grave concern as Parliament is obligated to monitor State expenditure. In particular, it is important that Parliament has the power to veto loan agreements which it feels would impose too great a financial burden for the country.
By removing the power of veto, government would be permitted to enter into loan agreements that could result in foolhardy expenditure and increase Zimbabwe’s foreign debt.
Alex Magaisa points out this amendment will merely legitimise what Government is already doing, since it has already made agreements with AfreximBank and unknown other institutions without seeking parliamentary approval. In May 2019 for example, Government borrowed $500 million from AfreximBank to fund a mining project backed by Russian investors. The loan will be paid back over 4 years and is secured with mineral exports as collateral (gold and platinum to be specific).
Amending the constitution to permit such actions would set a dangerous precedent and could land Zimbabwe in a complicated mess of loan obligations – especially when the country’s natural resources are at stake.