NMB Holdings Ltd (NMB) deputy managing director James Mushore says the sooner government realises that it cannot write economic rules that ignore supply and demand, the s
ooner it can set about implementing solutions to the current economic mess.
NMB had its foreign currency licence withdrawn by the Reserve Bank of Zimbabwe (RBZ) after it was accused of abusing the facility. The bank is however appealing against the decision.
In an interview Mushore said there are many micro and macro economic issues needing to be resolved before the serious foreign currency crisis itself can be solved.
“In the same way that fuel disappeared from fuel station forecourts when the authorities fixed the price at unrealistic levels, and reappeared on the black market at prices that were market determined, foreign currency will no longer be traded in banks but on the black market with all the attendant negative consequences that this brings,” he said.
“There are many micro and macro economic issues that need to be resolved before the foreign currency crisis itself can be solved,” Mushore said. “The sooner government realises that we cannot write new economic rules that ignore supply and demand, the sooner we can set about implementing solutions to the economic mess that we are in.”
Taking its cue from the Minister of Finance and Economic Development Herbert Murerwa, the RBZ said it would swoop on all banks found flouting foreign currency regulations.
While presenting his $672 billion Supplementary Budget Murerwa said it had been established that a number of financial institutions were involved in illegal foreign exchange market activities.
“It must be noted that, while the Exchange Control (General) Order of 1996 confers authorised dealership status to all commercial banks and accepting houses upon registration, authorised dealership is a privilege and not a right,” Murerwa said.
He said there would be “no sacred cows” when meting out “stiff penalties” to culprits.
Mushore said he felt NMB had not been given an adequate opportunity to be heard before the suspension of the licence.
“However, we have subsequently put our case to the authorities,” he said.
Asked whether he concurred with market speculation that NMB was being targeted, Mushore said: “We do not wish to speculate on the motives driving the actions of authorities.”
He said the foreign exchange trading income was a “small proportion of total income”.
The flamboyant banker said NMB’s performance was “not likely to deteriorate due to the suspension of its licence”.
The financial institution suffered a heavy setback when its stock broking firm Continental Securities Trading (Pvt) Ltd was suspended from the ZSE in July this year.
Trading in the company’s shares was suspended from July 7 to 9.
The suspension was however lifted after the ZSE was provided with assurances regarding the transaction in question and possible breaches of the bourse’s listing requirements.
In its results NMB’s inflation-adjusted loss after taxation of $165 million was reflective of the hyperinflationary conditions in Zimbabwe and a low return on investment assets.
“The company’s performance is not likely to deteriorate due to the suspension of its licence,” Mushore insisted.