FORMER NMBZ deputy managing director James Mushore bounced back at the financial institution last month as group chief executive officer after his recent de-specification by government.
Mushore, who is also co-founder of the bank, left the country mysteriously in 2004 for the UK amid allegations of exchange control violations. On his return in October 2007, Mushore was arrested, arraigned before the courts and acquitted. Businessdigest’s chief reporter Paul Nyakazeya on Tuesday visited Mushore at his offices in the capital for a chat on why he left for England, his return and what lies ahead for NMBZ. Below are the excerpts.
Nyakazeya: You are back at NMBZ in a new capacity. Can you explain your new task?
Mushore: There are many opportunities that could not be exploited during the hyperinflationary days because everything was going in the wrong direction and people had to run to keep still. Following our recapitalisation and our improved liquidity, we will be exploiting some of these opportunities so as to enlarge the group. In the process our various stakeholders can expect NMB’s rededication to its core values of integrity, professionalism and excellence.
Nyakazeya: How did you feel when government recently despecified you?
Mushore: I felt relieved. I also felt saddened that I was specified for six years and that after I was acquitted of the exchange control allegations in 2008, it took an additional two years to be de-specified.
What I found maddening was that the nation, from the time that NMB first opened doors on June 1 1993, had spent 10 years indigenising the financial sector and then at the beginning of 2004, with one or two exceptions, spent three months deliberately destroying the indigenous banking sector and the thousands of jobs that the sector had created directly and indirectly.
Nyakazeya: Are you bitter then about all these developments?
Mushore: I am not bitter but saddened by the amount of negative energy that is among us.
Nyakazeya: Should banks have been closed down in 2004?
Mushore: Look, I am not a politician, but certain things need to be said to set the record straight. You do not discipline a child with an axe. Similarly, where banks were alleged to have strayed out of their core business one must understand that in many cases they were looking to preserve shareholder equity.
Hyperinflation made savings of Z$ worthless. To preserve shareholder value any business had to invest in trading stock or other assets such as property and equities that could withstand the ravages of inflation.
This made many institutions very illiquid as they now had a mismatch of assets and liabilities, short-term liabilities and long-term assets. The remedy should not have been to close them down but to give them support to match their book whilst at the same time pursing economic policies that managed inflation downwards as opposed to exacerbating it.
Nyakazeya: You fled to the UK after police indicated they were keen to question you over allegations of foreign currency externalisation. What were your fears?
Mushore: That is incorrect. I left for the UK at the end of February 2004. At that time police had not expressed any interest in interviewing me or my fellow directors. It was nearly two weeks after I left that a “warrant of apprehension” was issued. Consequently, my fellow directors and I were never fugitives as described by the media. A fugitive is a person who is fleeing from custody. If someone is sitting in London and two weeks later the police issue a warrant of apprehension that person can hardly be described as a fugitive!
Nyakazeya: So why did you not come back at that stage?
Mushore: I did not avail myself to the authorities at that time because in my view the reconstructed criminal justice system undermined the foundations of natural justice. The amendments to the Criminal Procedures and Evidence Act, through the Presidential Powers (Temporary Measures) Act, affected the constitutionally protected rights of every individual with the result that a mere accusation was all that was required to incarcerate a person for 21 days.
Nyakazeya: You have been seeking partners to recapitalise NMBZ. What is the position regarding NMBZ Holdings Limited and African Century Ltd’s capital raising and share placement?
Mushore: We expect to conclude the capital raising by the end of May 2010. (Subject to shareholder approval, African Century Financial Services will subscribe for 549 million NMBZ new Ordinary shares for cash at a price of US$0,0089 per share, equating to a consideration of US$ 4,9 million in exchange for a shareholding of 25%.)
Nyakazeya: Is it true that the head of African Century Limited is the former head of Morgan Stanley Bank?
Mushore: The team behind African Century has extensive experience of banking, private equity and operational management. One of its principals, Jonathan Chenevix-Trench, is a former chairman and chief executive officer of Morgan Stanley International as well as being a former chairman of Morgan Stanley’s regulated banks in both the United Kingdom and Russia.
Nyakazeya: The local deposit base has stagnated at around $1,3 billion since the beginning of the year. What do you attribute this to and where is NMB sitting?
Mushore: The absence of meaningful lines of credit is largely responsible for the stagnation in banking sector deposits and this is also reflected by the general slowdown or reduction in economic growth forecasts.
Deposit growth is linked directly to economic growth since banks occupy a pivotal role in the economic growth of any country. NMB Bank witnessed a significant increase in deposits from $0, 6 million in February 2009 at the onset of the multicurrency system to $28 million as at 31 December 2009. This figure has since increased to $41 million.
The deposit base is set to increase upon finalisation of our capitalisation programme as this will open opportunities for significant lines of credit.
Nyakazeya: What is your comment on the effect of Indigenisation and Economic Empowerment regulations on the financial sector.
Mushore: This is a very delicate issue which needs to be handled prudently bearing in mind we, as an economy, are at the stage where we should be attracting international capital, a scarce resource. Banks are major players in attracting such capital through credit lines and their corporate finance departments’ initiatives.
We prefer to make our contribution in this area by engaging policy makers directly.
Nyakazeya: What makes NMB different from other banks?
Mushore: The business model that underpins NMB targets primarily corporates, institutions and high net worth individuals. NMB has built a strong brand which is synonymous with quality customer service and excellent relationship management.
Nyakazeya: What incentives are NMB offering or thinking of offering to encourage individuals to deposit their money with them?
Mushore: The bank believes that any customer who visits our branch or offices must have a unique NMB experience. Albeit the general scarcity of credit, we continue to offer borrowing facilities to our customers to boost their businesses.
We have a very unique International Gold Card, which works in over 122 countries and offers travel convenience to our travelling customers.
This card is very popular in the market and those who have used it will testify to its efficiency and convenience.