THE Reserve Bank of Zimbabwe governor Gideon Gono is standing firm in opposing unstructured indigenisation of foreign banks, saying he will not allow the process to be done “recklessly”.
Speaking to businessdigest on the sidelines of a press conference in Bulawayo this week, Gono said the banking sector was sensitive and he would not allow a rushed indigenisation of foreign- owned banks.
His comments come in the wake of threats by former Justice minister Patrick Chinamasa the Zanu PF government would go after foreign banks.
“There will not be any unstructured or chaotic forced interventions in the banking sector outside the technical agreements and legal ways of doing things which we will agree on as chief advisors to government,” said Gono.
He moved to allay heightened fears gripping the financial sector and uncertainty over speculation the local currency would bounce back amid intensified implementation of the indigenisation policy by the Zanu-PF-led government.
As part of its economic policy, Zanu PF had said the indigenising of foreign-owned banks — Standard Chartered, Barclays, Ecobank, Stanbic and MBCA, a unit of South Africa’s Nedbank — which account for more than 70% of the market share of the banking sector — would be carried out.
Under the country’s indigenisation law, foreign-owned companies must sell or cede 51% of their operations to black Zimbabweans or the state-owned National Indigenisation and Economic Empowerment Board.
However, the policy has been criticised amid concerns it would destabilise the financial sector and the economy.
Gono said the central bank would not return the local currency anytime soon, adding this could only be done in no period less than four years if targeted economic growth is achieved.
He said the return of the local unit was inevitable, but would only be done once the economy had achieved a persistent growth of 7%, noting industry must at least achieve capacity utilisation of 80% and employment levels of between 60 and 70%.
Industry is currently in distress and capacity utilisation, according to the Confederation Zimbabwe Industries will fall below 44% by year-end.
Unemployment is estimated in some quarters to be above 80%, a figure Gono said was not permissible for a return of the local currency.
The economy continues to weaken with government recently revising downwards the GDP growth to 3,4% from the initial target of 5% owing to the under-performance of key economic sectors — mining and agriculture.
Speaking on improving liquidity in the country, Gono said government must come up with an enabling environment allowing the inflow of foreign direct investment and lines of credit. He said the country had a high financial risk, a situation that was limiting access to lines of credit.
Gono said increasing exports coupled with diaspora inflows will improve the country’s liquidity position.
He said he will next week present the monetary policy where he is expected to tackle the issue of banks complying with the minimum capital requirements and the general performance of the banking sector.