Indigenisation design: Scorched-earth policy

THE relentless attempt by Indigenisation minister Saviour Kasukuwere to subject the banking sector to the same model of empowerment where the banks will be forcibly made to surrender 51% of their equity to several shady “institutions” under the guise of transformation begs thorough examination. For starters, if Kasukuwere does in the end manage to take over the banks, what in effect would he have indigenised? The buildings in which these banking halls are housed? The deposits or the assets in the form of loans?
After all, many of the banks do not own the buildings which house their banking halls, apart from their head offices, and even if they did, bank customers are mobile. So taking over, for instance, Barclays Bank’s soon-to-be opened Kamfinsa branch will not lead to any acquisition of the bank’s assets, because the building is actually owned by Pearl Properties. Lest we forget, a bank’s real assets are the loans that it advances to borrowers. The depositors’ funds, which the banks on-lend to borrowers are in effect liabilities and these are extremely “timid”.
The forcible takeover of foreign-owned banks will naturally lead to a flight of capital, not only from the targeted banks but from the country at large. Banks that have good corporate governance as has been the case with most foreign-owned financial institutions have attracted deposits.
That may be the attraction for the Kasukuweres of this world, but again, those deposits are not assets but liabilities.
Why should anyone want to rush to take over a business with substantial liabilities? Should a bank exercise prudent lending and extend a smaller proportion of these depositors’ funds means it will be having more liabilities. More importantly, should depositors have no confidence in the owners of the bank, they will naturally withdraw their funds from it, what is generally termed as a run on banks or “flight to quality”.
So that which the indigenisation agents will be left with will at most consist of the US$12,5 million statutory requirements. Unless of course this is the myopic objective of the exercise.
If we consider that there are about 26 financial institutions and with an average capitalisation of US$10 million each, this will translate into some US$260 million, or US$300 million if we round off.
We shudder to think why a responsible government would want to upset the very vital banking sector so that a few of its individuals can lay their hands on very fickle assets. It is telling that such desperate measures are being taken now, as elections are likely within the coming 12 months. If on the one hand they really intend to take over these banks as they say, this may be the last chance by those in power to loot before they are kicked out of power by a legitimate, democratically-elected government. These desperados, seeing international pressure for free and fair elections closing in on them, are having a last-ditch attempt to amass illicit wealth. If not, the empty threats are clearly destructive and may be an attempt to ruin the economy by dealing a lethal blow to make it difficult for the incoming government to restore growth.
Either way, the actions and rhetoric are severely damaging and can only lead the economy down the path of destruction.
It might well explain why they are prepared to destroy Zimbabwe’s legacy of education by also helping themselves to private schools, under the pretext of indigenisation. Zimbabwe has been reputed to have a well-educated populace, that in spite of the destruction of public education still remain the envy of many on the continent and internationally. Many of the private schools are owned by churches and trusts. The church-owned mission schools are the very ones that helped today’s political elite to attain a decent education under colonialism –– a case of biting the hand that fed you. By implication, taking over these mission schools means taking over the churches that run them. As for the non-church-owned private schools, the majority of them are owned by private trusts or family trusts.
Government is targeting the financial, tourism, education and sport, engineering and construction, energy, services, telecoms and transport sectors. Indigenisation has now descended into a scorched-earth policy.