JUSTIN Tapera is fast sinking into debt. During the festive season he had to borrow $1 million to buy farming inputs for his small plot in his rural Zvimba home. Last week he had to implore his equally pressed relatives to lend him $5 million t
o pay fees for his two sons attending a mission school in Sanyati. The reasons for his near destitution: “My money is locked up in Trust Bank. And the so-called ZABG has not opened as promised for me to get money for school fees.”
Elsewhere in Gazaland, Highfield, Kizito Maguta is contemplating closing down his furniture making business, his only means of survival. “If I don’t get my $7 million locked up in Royal Bank to buy glue and timber then I am done,” Maguta says. He too has been living off friends and relatives. He has kept his fragile business running on borrowed income. His creditors could soon be haunting him.
Tapera and Maguta are only two of thousands of depositors who have been reduced to destitution by the sudden closure of their banks by the Reserve Bank of Zimbabwe last year. Their plight is similar to that of thousands of others who have been waiting in vain for the Zimbabwe Allied Banking Group (ZABG), an amalgam of troubled banks, to open so they access their money.
Reserve Bank governor Gideon Gono promised last year that ZABG would open to the public early this month. Three weeks into January and the depositors are still waiting. Expectations have given way to frustration. “When is the so-called ZABG going to open? Rakamboita seyi iro zibank racho risingavhurwe?” quips an angry Maguta.
Confusion and uncertainty continue to dog the operations at ZABG with experts saying there is chaos on the ground. They say the project could hit a brick wall because of administrative and logistical issues, which management and the central bank are failing to overcome.
This week Gono made an attempt to “clear the air” with a statement which analysts described as vague and unhelpful. The statement, the first on ZABG since the idea was mooted, said the project was delayed because of the the legal and technical process which has taken longer than envisaged to conclude “Regrettably, arising from insufficient updates to the market and poor communication on our part regarding this pioneering initiative ZABG), the market and, indeed, the press has been left with the impression of doubt or lack of confidence on our part, to see the take-off of the new baby,” Gono said.
“We apologise for any anxiety or inconvenience that this temporary communication shortcoming could have caused to all our stakeholders including those who were expecting, in line with my earlier market promises, to get their $5 million or less drawdowns from locked-up monies in distressed financial institutions under curatorship.” Analysts said the statement lacked substance in that it did not give the depositors a precise date and progress made so far.
On Monday state media reported that ZABG was going to open before the end of the month. It said the RBZ would decide which banks would be brought under the ZABG. However, an expert said it was impossible for the bank to open this month.
Sternford Moyo, a senior partner with Scanlen & Holdness, said there were still a lot of outstanding issues that could not be sorted out before the end of the month.
“The signing of the Troubled Financial Institutions (Resolutions) Act into law does not mean that the bank will open immediately,” said Moyo.
“The banks will have to be declared ‘troubled’ first and then the central bank has seek confirmation with the court. After that the shareholders, creditors, depositors and former directors are given 10 working days to respond.” Moyo said before the judge could confirm the RBZ application, he needs proof that the shareholders, creditors, depositors and former directors have been informed of intentions to take over their bank.
“The stakeholders have a right to challenge attempts to take over their bank. They have to present their case to the court. If that happens then the process might take even longer,” he said. Jacob Mafume of Zimbabwe Lawyers for Human Rights (ZLHR) said the project was shrouded in secrecy, an issue that did not help the public. He said people did not have confidence in the project because they were never consulted in the first place.
“The Reserve Bank did not consult with depositors, shareholders and creditors before they formed the ZABG,” said Mafume. “People have confidence in issues they participate in from the start.” The bank, Mafume said, now faced the risk of being hit by a serious deposit fight as soon as it opens.
Analysts also questioned the constitutionality of the Troubled Financial Institutions (Resolutions) Act, which seeks to legalise ZABG. The Act was recently signed into law by President Robert Mugabe. They say the Act contravenes Section 16 of the constitution, which deals with property rights.
Tendai Biti, a lawyer with Honey & Blanckenberg, said there was need to look at ZABG in line with the basic rights in the constitution. “The whole thing is a dog’s breakfast. They are trampling on the people’s property rights in an attempt to disguise their failure,” said Biti.
“This is the problem with making statements under political pressure without enough thought and planning. Gono has been doing that since he was appointed,” he said.
“There was very little planning prior to the announcement of ZABG. In their bid to gain mileage they raised people’s expectations, which they know they cannot meet. And when they fail they find scapegoats,” said Biti.
Trust, Royal, and Barbican were this week declared candidates for ZABG, but sources say the legal processes have not yet been completed. The governor added to the confusion when he said other banks would be allowed to seek alternatives to recapitalise.
Brian Kagoro, chairman of Crisis in Zimbabwe, said the problem was that ZABG had been politicised.
“Intentions are not actions. Action is not progress. Strategies are not actions either. Those who planned the ZABG did not think about the legal implications and the impact of their actions on the poor man,” Kagoro said.
“In their grand declarations of national interest some innocent investors have been turned into paupers. It’s sad.”