IN a move that will send shockwaves across the fragile banking sector, already reeling from a chronic liquidity crunch, foreign-owned banks in Zimbabwe have been ordered by Indigenisation minister Saviour Kasukuwere to comply with the controversial 51% empowerment requirement by the end of June.
Report by Faith Zaba
Financial institutions under growing aggressive indigenisation pressure include two South African-owned banks, Stanbic (a member of Standard Bank Group) and MBCA which is owned by Nedbank, and British-owned Barclays and Standard Chartered.
The banks, together with CBZ, form the core of Zimbabwe’s banking sector.
The latest move is set to fuel the on-going battle between Kasukuwere and Reserve Bank of Zimbabwe (RBZ) governor Gideon Gono, engaged in an ominous showdown of late over the indigenisation programme. The conflict has sucked in senior Zanu PF officials, including Vice-President Joice Mujuru and President Robert Mugabe.
Kasukuwere is demanding that banks comply with the empowerment law, while Gono says he will not allow that to happen as several relevant pieces of legislation still need alignment. Besides, Gono says a “one-size-fits-all” approach would not work.
Mugabe agrees with Gono on this and said Kasukuwerehad made a mistake by allowing mining companies to get fair value compensation, suggesting he preferred seizures demanding mineral claims be used to secure equity.
In a clear indication the gloves are now off in the running feud, Kasukuwere wrote a letter to Gono on March 8 2013, insisting indigenisation of banks was well underway.
The minister warned the banking sector was not exempted from the controversial Indigenisation, a demand Gono says he would not succumb to.The letter, seen by the Zimbabwe Independent, was copied to the Chief Secretary to the President and Cabinet Misheck Sibanda, his deputy retired Colonel Christian Katsande and Central Intelligence Organisation director-general Happyton Bonyongwe.
“You may recall that on June 29 2012, I published General Notice 280 of 2012 in terms of Section 5(4) of the Indigenisation and Economic Empowerment (General) Regulations 2010, which prescribed the indigenisation framework for the financial services sector,” the letter says.
“The General Notice requires all financial institutions to comply with the 51% indigenous shareholding requirement within a period of one year from the date of publication of the notice.”
The letter adds:“I hereby wish to advise you that I am proceeding accordingly to enforce the statutory requirement. As a regulatory authority for the financial services sector, you will be consulted, consistent with the laws of the country, at the appropriate time.
“May I underline that compliance with indigenisation and empowerment laws and regulations is not optional and I, as the administering authority of the Indigenisation and Economic Empowerment legislation, am duty-bound to implement the laws of the land.”
The letter was written a week after Mugabe appeared to agree with Gono who has always argued that a “one-size-fits-all” approach would not work. Interestingly, the letter was done last Friday — the day this paper ran an interview with Gono.