SINCE retiring from ZB Financial Holdings four months ago following an illustrious career that saw him shepherding ZB Bank to being the seventh largest in the country in terms of deposits, top banker Elisha Mushayakarara has been experiencing what retirement and relaxation entail.
He recently returned from holiday in the United States and the Caribbean, and has found more time for his grandchildren. Mushayakarara left ZB Financial Holdings (ZBFH) this year after holding the post of group chief executive officer for 20 years and is credited for his able and wise leadership of the group.
He joined ZBFH in 1993 from the Ministry of Finance where he was senior secretary of Finance for 12 years. Before joining Treasury, Mushayakarara worked for the Ministry of Finance in Zambia.
ZBFH has interests in banking, life assurance, short-term insurance, reinsurance, building society, asset management and stock-broking.
Its flagship arm, ZB Bank, has been on a growth path, increasing its market share in terms of deposits. Head AMH Magazines Davison Maruziva recently interviewed Mushayakarara. Below are the excerpts.
DM: Who is Elisha Mushayakarara?
EM: I started working in 1967 at the Ministry of Finance in Zambia. I am a product of an interesting initiative taken by the Commonwealth, where they decided to prepare black Rhodesians for accelerated take-over and running of the country. That was in 1966 and so I got into the Zambian civil service through that programme.
So I found myself in the Ministry of Finance. I had no intention of staying there as I wanted to pursue my Master’s and PhD but I was there for a good 12 years.
At Independence, I had forgotten where I came from so I was hunted and was brought here and joined the Ministry of Finance. It was an interesting experience because I do not think the whites had an experience of a black Zimbabwean running the Ministry of Finance.
I came in as deputy secretary in the Ministry of Finance and in 1982 was promoted to Secretary in the Ministry of National Supplies and was there up to 1984 when I was recalled to the Ministry of Finance. I was there for 19 years, then was asked to take over at Zimbank from Leonard Tsumba, who had left for the Reserve Bank.
I was at Zimbank for a good 20 years. I am an economist first and foremost. In Zambia I did not think I would be staying in the Ministry of Finance any longer than necessary. When I was there I did accounting and from there I ended up doing finance and and banking.
I got in there and it was a coincidence. I was asked to go and succeed Tsumba.
I thought it was going to be a trying experience. I made decisions which bankers do not make. I think those decisions made ZB what it is and as it turned out it was a blessing because I did things that bankers do not do.
I was president of the Bankers’ Association of Zimbabwe twice and my colleagues must have found something in me which they did not have and which they valued.
I could deal with the private and public sectors and whenever there was some misunderstanding between the banking sector and the public sector all my colleagues used to look up to me.
After my second term I was asked to continue as the immediate past president of the BAZ. I am a banker and the major role was bringing the public and private sectors together.
It is a role I understood very well. I think I can open up any door in any sector and I want to think they are open. I have not been a controversial person.
Recently, I spoke at the Zimbabwe Institute of Management in Vumba on succession and last year I was given an award for a life-time of excellence in management by the Zimbabwe Institute of Management. I think it turns out I manage people very well.
After talking to them about my experience I believe they learnt how to manage people below them for take overs.
In the public sector it’s different. But at the bank, I made sure that succession and planning was in place. It is three months after I left and it is still ticking. Believe it or not, over the last three or four years I made sure that people below me did the work.
DM: How did it feel to work in the new government?
EM: For me it was not a problem at all. What I found here was exactly what we had in Zambia but those who had been in the system prior to Independence found it difficult to accept someone like me. I must say some of the then permanent secretaries found it difficult to understand or swallow their pride.
I remember one Permanent Secretary who was responsible for the roads but who was extremely negative towards me. I reminded him that I was in charge of crafting the budget and that I would fix him. I said that at the end of his budget I would knock off one zero and instead of US$14 million he would end up with US$1,4 million. That just shut him up.
Then he asked whether I was going to be his boss. I said if he happened to be below deputy secretary then he was going to be below me. He resigned and left the country. The next time I enquired where he was, I learnt that he had left for the UK and that both he and his dog were not in good health. After a year the leadership programme I had put in place produced the likes of Sij Biyam, CEO of the Bankers’ Association and Isaac Takawira, the former managing director of Barclays Zimbabwe.
DM: Can you describe the evolution of the treasury process and how the ministry of finance worked?
EM: At Independence, we had to refocus resources and attitudes for the benefit of the majority. It was not easy, it was difficult. I said we needed to divert resources from, for example, Prince Edward to the then Harare High School. We managed to get that going.
Initially, there was a lot of resistance. There was the belief that Andrew Flemming Hospital (now Parirenyatwa) had to be the showpiece of what a hospital in Zimbabwe should be but we knew that there was Kugomo (Harare Hospital) and we knew that the rural hospitals needed to be supported.After working with the World Health Organisation and the World Bank we managed to get the resources and channelled them to high priority areas — what today you call redressing historical imbalances.
The second was to instil financial discipline in our people and I recall one permanent secretary saying he was going to report me to then Prime Minister Robert Mugabe, now president. I said to him that when he gets there he should remember that the Prime Minister was the one who had sent me to do what I was doing.
I am referring to the then ministry of Youth, which bought a public address system in London. That thing was quite a shock.
Unfortunately, they had not anticipated that the ministry was not going along with what we had done. It was something that was not a priority.
DM: Can you tell us about the financial discipline needed in such a post?
EM: It is getting people to appreciate they must have a balanced budget. We were working with the World Bank and the IMF. There was always a suspicion that those organisations were telling us what we should be doing. Up to now there is some feeling that what we do is being decided in Washington. One of the things I had to remind one of our political masters was that Economic Structuiral Adjustment Programme (Esap)demanded we could not spend what we did not have. Unfortunately that is not so. It took some time to get that type of discipline accepted.
Recently I was told that my nickname those days was “Dr No”. Esap is referred to as “Extreme Suffering for African People” and how it brought about hardships. We did worse things to our people in order to get things corrected — school fees and hospital fees subsidies were stopped. We also had one or two of the harshest droughts but the world came and supported us because we were doing the right thing.
But we did not fully commit ourselves to that programme. It was referred to as (then Finance minister Bernard) Chidzero’s programme and supported by the president. People say it was difficult for people. Everything was going perfectly well but there was still lack of commitment to the programme.
It was during that period that we built the dual carriageway to Chitungwiza. The railway line to Chitungwiza was a bit shaky so instead we put in the dual carriageway but people were not fully committed to the programme.
The worst mistake was the work stream programme. There was one weak stream which was supposed to work on tariffs. It did not work well and the Tariff Commission was put in place years after I had left the ministry. The idea was that it would protect the local manufacturing sector.
People talk of Bulawayo dying or being a ghost city. That was the reason why tariffs were put in place. But opening up of our trade made it even worse. Not that Common Market for Eastern and Southern Africa (Comesa) and trade protocols are bad if we had taken measures to protect the industrial capacity the country had. Now it is cheaper to buy cooking oil from South Africa yet the country grows so much soya beans. We did not put good tariffs in place and take care of new eventualities.
DM: Can you describe your relationship with the central bank?
EM: One of the things I insisted on is to do everything through the central bank and have open lines of communication. The central bank governor is one person who listens to advice. He had lots of time for me. He is someone who I think did his best under very difficult conditions. He went in when the economy was already faltering. When you look at all the decisions produced they all try to put in place a system which brings about order. It is a system that ensures that the economy grows.
ESAP and all the other countless initiatives all have these objectives in mind but I think when the economy is not performing it is not easy.
We managed to get ESAP going but it was with the support of the President. We discovered that we were not even ready to implement. When we met him later and tried to explain why we had not made progress at the rate initially anticipated he said please go ahead and implement. His personal support helped us.
DM: What would you do differently if you came back asPermanent Secretary?
EM: I do not know how much power Permanent Secretaries now have but in our time our advice was taken seriously. A lot of that advice was taken seriously. The first thing I would do would be to find out if there had been any changes. If there have been any changes, I would say the best thing we can do for our people is to get the economy back on track. I would advise the minister to pursue re-engagement with the world. We cannot pretend we are an island. In this world, we would have to have partners that we have to work with. The ZMDC’s removal from sanctions is a good example of how international relations work.
Back then we did not have the resources to exploit then but you can only do so by working with the world. The potential to succeed in agriculture is immense because of the consumption of tobacco by the Chinese and soya beans for the Indian markets.
In India there are about 700 million people who do not eat meat. That could get our agricultural sector going. Look at Europe and the West; we used to have a thriving horticulture sector. We lost that market. These are things we should be making a return to.
It is difficult for the Ministry of Finance to meet legitimate demands such as those of the civil servants without the support of the international community.
DM: Can you share with us your experience in the banking industry?
EM: I walked in at ZB and called senior management. I said we have three floors in this building and the lifts are always full. I have a feeling that there are far too many of us here. There was resistance. The number of branches was given as an explanation and justification.
I called in consultants and told them my feelings and that I wanted to end up with an efficient group. That is what we did the first two/three years. I also discovered we had a very bad loan book and I was told that it was difficult to recover the money.
I said “No” there is nothing difficult about recovering the money. I said there was no problem on how to recover the loans.
The consultants came up with a set of recommendations and one of them was that we were overstaffed and that we needed to change. We also sorted out the loan book. We managed to get all the influence under control. The consultants also came up with a recommendation to improve our system when it came to computers.
I said their recommendation was wrong and that there was another system. However, my subordinates understood it better than I did. As it turned out it was one of the best systems in the country. As a result of that Zimbank started ticking.
Before I left we had a newer version of the system. It transformed the bank from being an old- fashioned bank into a modern bank. And just when we got on and were ticking we found ourselves on the sanctions’ list. When we got onto it we made representations and we were removed from the EU list but the bank remained on the US list. That is the thing that made it difficult for us to implement things we wanted in order to transform the bank.
There is need for a new chapter and we have had positive remarks. It was encouraging that Agribank and IBDZ are off. I don’t know when ZB will be off. I keep saying perhaps that is the problem with the alphabet and you are the last.
You should not expect to be the first.
I hope that these restrictions will be lifted and the sky will be the limit. It may not be long before the bank is removed. I think people in the West are now saying this is the government we are going to deal with in the next five years and we have to live with it.
DM: To what extent was liberalisation of the banking sector responsible for the success or lack thereof in the financial services sector?
EM: When I was at the Ministry of Finance one of the discussions we took was that we liberalise the financial services sector. It was part of ESAP. We allowed a lot of players e.g. NMB, Intermarket, etc onto the scene. It was not a wrong decision. We needed to get our own people involved in the financial sector. We did not want to depend on foreign banks. We did not put any special incentives for them in the beginning. They were all very excited.
CBZ and ZB are indigenous because they are owned by Zimbabweans.
DM: What went wrong?
EM: I believe when it comes to banking the best thing is to stick to correct banking practices. I referred to very difficult clients we had to deal with and I said “No”. This is a financial bank. We said sorry to financial institutions that were not sticking to correct banking practices.
My own principals were asking why we were not performing like the other banks. At one time I got so hot under the collar that I said when the day comes I want this bank to continue to exist. My bank said thanks. I did not buy bricks or trade in cars. I stuck to the core business because that was correct banking practice. That is what saved us. There was no magic.
There was nothing wrong with indigenous banks. There came a time when the central bank reached a position and I said then to the Governor you do not have to deal with them. A lot of them had accounts with ZB. We just insulated the central bank from the goings-on.
When the banks came to me I said they had to do the right thing. One of the reasons I insisted was that when a lot of new banks came onto the scene they had no corresponding banks abroad. I carried a lot of them for as long as they were doing the right thing.
Whenever I visited a lot of the foreign banks they ask me and I have said the local banks should be given a chance. I felt it was incumbent upon me for the banks to succeed. That is what happened.
DM: Did they envisage a scenario whereby opening up the financial services sector would result in owner-managers and discipline difficult to instil?
EM: Maybe the situation should not have been allowed to get to position where you have the owners being the managers. In all these things when we went into financial sector liberalisation we did not have many people who were experienced in running banks. So these people are the people who started the banks and those who were not entrepreneurs did not succeed.
What happened between 2003 and 2004 suggests that banking supervision should have been tight and those who did not stick to core business got their fingers burnt. We need managers who are there only to manage. The central bank is putting in place measures that will not lead us into that situation again. ZB succeeded probably because the CEO was not the owner. I am a shareholder. It was a very valid lesson.
DM: What were you doing right on the bank’s lending culture?
EM: The restructuring spent quite a lot of time on the lending system. The operating system had more emphasis on the lending process so that anything going wrong the bells would start ringing. Right now they are getting certain upgrades. We also have to look at just how difficult conditions in the economy were. The manufacturing sector is as good as dead. Look at the retail sector. Two years ago retail was the hottest sector. Now it is not. From what I have heard, there were certain cases of reckless lending.
DM: What are you doing now?
I am relaxing. I am on a number of boards and chair two listed companies. I am also a farmer, big into tobacco. My role is to ensure that things are going well. In the last three months I have been learning a lot. I called my son, who was in the United States. He has computerised operations on the farm and what he has done is unbelievable. The fuel bill we had has been halved while the hectarage has increased.