POSB privatisation could be a huge challenge

GOVERNMENT’S effort to privatise its wholly owned People’s Own Savings Bank (POSB) is no walk in the park as investors fret over political and economic uncertainty, highly placed sources say.

Taurai Mangudhla

Officials close to the restructuring exercise, which will also see the bank launching a new commercial unit, said there had not been any interest on the state asset so far, likely due to the current operating environment.

“This is no surprise because foreign investors are worried about our laws and lack of consistency,” said the source who requested not to be named.
“We are now pinning our hopes internally, on local investors, who do not have the funds.”

However, the official said even the local investors have also adopted a wait and see attitude in the face of a decisive election, likely to change the political and economic terrain.

Analysts also argued efforts to privatise state owned banks could prove to be a huge challenge as investors generally prefer a flexible partner with less beauraucratic processes and willing to disclose information.

Government recently approved restructuring proposals that will transform POSB’s shareholding structure and lead to the possible listing of the bank on the Zimbabwe Stock Exchange.

The move is aimed at enabling the bank to modernise at a much faster pace with the inclusion of private players who will bring in capital and lines of credit. State Enterprises and Parastatals minister Gorden Moyo in January said government had approved a restructuring plan which would also see the bank listing on the local bourse.

“Three key issues that need to be addressed are firstly that the POSB’s original mandate of serving the grassroots people needs to be retained. There is need for the country to have a bank that specifically caters for the marginalised sectors of the economy, particularly the rural-based population. POSB’s infrastructure and distribution network has that reach. And that needs to be preserved,” Moyo said.

“Secondly, there was a proposal to introduce a commercial unit within POSB that will be very competitive. This unit will aggressively engage with other big banks in competing in the same space with them. To this end, POSB will need to be capacitated through an injection of capital and additional skills.”

Moyo said this would necessitate the creation of a joint venture with an appropriate local, regional or international partner.

“To this end, the agreed position is that government is prepared to relinquish 49% shareholding in POSB to such an identified partner,” Moyo said. “Government would need to amend the POSB Act to align with the new strategic thinking.”

Detailed documents on the proposed plan seen by businessdigest show that after amendment of the POSB Act, a strategic investor would then sink in capital.

Officials preparing the restructuring memorandum made several recommendations with four options: “These options entail invoking Section 25 subsection (3) of the POSB Act which provides for equity participation of up to 49% by the private players in POSB”.

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