FOREIGN banks in Zimbabwe, among them units of SA groups, on Tuesday got respite to their plans to comply with the country’s empowerment laws after President Robert Mugabe clarified confusion regarding implementation of the law and said the banks remained under the Finance Ministry.
SA banking groups in Zimbabwe include Nedbank (which controls MBCA Bank) and Standard Bank (which controls Stanbic Bank). Other foreign banks include international finance institutions Standard Chartered and Barclays as well as regional bank, Ecobank and CABS, in which Old Mutual has a stake.
Zimbabwe had given foreign companies in the country a March 31 deadline to submit empowerment compliance plans or risk being shut down. The foreign banks submitted their plans but disagreements between Finance Minister Patrick Chinamasa and Indigenisation Minister Patrick Zhuwawo had left the banks uncertain of their future.
But on Tuesday, Mugabe clarified the position regarding implementation and indigenisation compliance by the foreign banks. He said the foreign banks remained under the control of the Finance Ministry and also clarified that their compliance modalities would be different from those of the other sectors.
“The banking sector shall continue to be under the Banking Act, which is regulated by the Reserve Bank of Zimbabwe,” said Mugabe in a statement on Tuesday after a cabinet meeting.
Mugabe added that it was essential to clarify the position on foreign banks’ indigenisation compliance to promote “financial sector stability, confidence” and financial inclusion.
“These institutions will nonetheless be expected to make their contributions (towards compliance with indigenisation demands) by way of financing facilities for key economic sectors and projects…,” added Mugabe.
Zhuwawo had said the plans submitted by foreign banks in Zimbabwe were not acceptable, with Chinamasa having a different view after he said, together with the central bank, that the banks would become compliant if they followed the plans they had submitted.
Mugabe also sought to clarify the points of disagreement between the two ministers. He said “employee share ownership schemes, linkage programmes and such other financial empowerment facilities as may be introduced by the Reserve Bank of Zimbabwe from time to time” would effectively make the foreign banks compliant with the country’s empowerment policy.
Zimbabwe had also sought to restrict foreign investors from getting into “reserved sectors” that include retail, tobacco processing and transport among others. However, already existing investors would not be affected as “existing businesses and where a special dispensation is granted by the relevant line minister” will be exempt.-fin24