Bankers Association of Zimbabwe president John Mushayavanhu said the country’s banking sector already met empowerment regulations.
Empowerment and Indigenisation minister Saviour Kasukuwere three months ago gazetted regulations requiring that a company capitalised above US$500 000 must cede 51% of its shareholding to local investors.
Before the liberalisation of the economy Zimbabwe had seven banks, six of them owned by multinationals.
Mushayavanhu told businessdigest yesterday that: “Currently we have over 20 commercial and merchant banks in Zimbabwe, and only four regional and/ or multinational banks.”
“To me, we have achieved our indigenisation objective in this sector. The economy needs a blend of local, regional and multinational banks to facilitate mobilisation of foreign credit lines.”
A mix of foreign and local ownership of the banking sector is considered healthy as it allows the financial institutions access to lines of credit. According to Mushayavanhu, this also ensures that the local banking sector is safe as it would also be capitalised using external resources, says Mushayavanhu.
A rushed entry of new players into this sector, Mushayavanhu said, will do more harm than good. He said: “I believe that the country can learn a few lessons on possible ways to indigenise the economy by taking time to understand developments in the financial sector over the past decade,” he added.
“Indigenisation in the financial sector was achieved through various means, such as affirmative action in issuing banking licences, mergers of locally owned and foreign owned entities (First Merchant Bank and Heritage Investment Bank); outright purchase from foreign owners (Beverley Building Society, CBZ). All these transactions were done freely and willingly by the parties involved.”
Banking in Zimbabwe has been considered the biggest beneficiary of the liberalisation of the economy. It has, however, turned out that the financial institutions which emerged out of the opening up of the sector have tainted the banking sector after they were found to have liquidity problems after December 2003.
A liquidity crunch in late 2003 saw a run on deposits and the folding of four banks namely Royal, Time, Barbican and Trust Bank, then the third largest bank by assets. Three of the collapsed banks had their assets put together as the Zimbabwe Allied Banking Group.
Leonard Makombe/Paul Nyakazeya