This week Zimbabwe Independent chief business reporter Paul Nyakazeya (PN) caught up with him and spoke about the financial institution’s expansion, the banking industry and the future of the sector.
PN: What have been the major highlights at Tetrad Group since you joined in January 2002?
EM: When we joined Tetrad, it had only a Discount House licence. Our five year vision was to convert it to a much bigger and more profitable entity. After five years that objective was achieved. Through a number of mergers and acquisitions we now have Tetrad Holdings, a local diversified holdings company with businesses in banking, insurance, property and agriculture.
PN: Is Tetrad not a financial holdings company?
EM: That is the general perception; in fact Tetrad Holdings is an investment company with diversified interests. Admittedly, we are better known for our Merchant Bank (Tetrad Investment Bank) and our Asset Management Company (TFS Management Company Pvt Ltd)
PN: What is the value of the assets managed by Asset Management, TFS Management Company Pvt Ltd?
EM: Funds under management are plus or minus US$30 million with a growing book.
PN: Looking back at the company’s growth, is there anything you could have done differently?
EM: Hindsight is a great thing. I suppose we could have been more aggressive in our growth. The one objective that we never achieved was to establish ourselves in the region. We, however, intend to do so in our next five year plan.
PN: When did the first five years in question end and when did the second start?
EM: The first five year plan began in 2003 and ended in 2008. Over the past two years we have been consolidating the group, we are currently finalising our next five year plan.
PN: You worked at ZB Financial Holdings and Discount Company of Zimbabwe until it merged with Kingdom Bank. When you look at these companies what makes your heart bleed or makes you smile?
EM It is not so much that my heart bleeds or I smile. The only constant in the world is change. All those institutions you mention went through a difficult period over the past five years in particular, all I can do is wish them well in the coming years of transition.
PN: What should shareholders and your clients expect from Tetrad in the next financial year?
EM: A well diversified African industrial and financial services group.
PN: Should banks have been closed in 2004?
EM: The opening and closure of any business should always be market driven.
PN: The local deposit base has stagnated at around US$1,8 billion as at May 31, what do you attribute this to?
EM: It reflects the pace at which the economy was recovering. It is not an overnight success. Zimbabwe’s economy has not been performing well enough for us to attract capital and improve liquidity. We are still not seen as a favourable destination. We need to be consistent with our policies to attract both local and foreign investment. The other set back is Zimbabweans seem not to have regained faith in the banking sector. It is up to bankers to work hard to regain the trust and confidence of the banking public to ensure the continued growth of our deposit base. We as bankers are working hard on that.
PN: Some believe the banking sector has not done enough to mobilise lines of credit to boost its deposit base. Is it a fair assessment?
EM: It is not fair to say so. Banks are working hard, it is not a question of if we have done enough, we have no choice but to work harder. As Tetrad, we are working with a number of local and foreign institutions to improve liquidity which will in turn reduce the cost of money and improve service delivery.
PN: What is your comment on the effect of Indigenisation and Economic regulations on the financial sector?
EM: One is not completely sure what the effect will be because it is an issue still under discussion. If, however, we as a sector deal with indigenisation collectively and transparently, there should be no problem. The benefits should be clear to the sector as well as the Zimbabwean economy.
PN: What makes Tetrad different from other banks?
EM: Tetrad Investment Bank is the only investment bank in the country. We want to strengthen our position in that space and become the Investec of the region.
PN: It is said there are still many internal weaknesses in bank operations entwined with currency and credit risk in Zimbabwe, what can be done to improve this scenario?
EM: The Banking Act has not yet developed to the levels that even the Central Bank would want. We can not expect much financial stability as long as the Central Bank is unable to play its role as lender of last resort together with a more active interbank market. Banks themselves will have to strengthen their balance sheets by growing their capital base.
PN: What significant trends do you see in the future of the banking industry?
EM: There will definitely be greater competition from within and as well as internationally. There will be mergers and acquisitions, as institutions strengthen their balance sheets. All this will be good for the banking public as well as the Zimbabwean economy.
PN: What incentives are Tetrad offering or thinking of offering to encourage corporates and individuals to deposit and invest their money with them?
EM: Providing clients with a good service is the key. If you are truly driven by that need, then you will drive your business in the right direction. We are working on improving our brand, our systems and training ourselves to deliver world class service. Innovation is the key, we recently launched the first ever gold linked unit trust fund which has generated a lot of interest in the market. Further innovation on this product and others is in progress.
PN: Which local bankers do you respect and why?
EM: I respect all local bankers for surviving the difficult times we went through from 2000 until dollarisation. But as bankers we need to regain respect from the public more than amongst ourselves. If you want names, I personally credit Nick Vingirayi and Gibson Muringayi for starting the first black owned financial institution, Intermarket. They broke the mould, the rest is history.
PN: Although the political situation plays a very important role in business performance, what do you think business and banks should do to improve their earnings if the current environment does not change in the next 12 months
EM: Banks will need to continue to manage their businesses well, that means cutting costs, bringing in new products and improved service delivery. They need to continue to think outside the box. After all we have done it before during the hyper inflation days. Regardless, real economic change is coming, we need to adapt to survive.
PN: With all these expansion plans you have talked about, do you have any plans to list on the stock market?
EM: It is a decision we will think hard about in the coming five years.