Bank CEOs not keen on indigenisation

EXECUTIVES in Zimbabwe’s banking sector are not keen on indigenisation of the banking sector, a research survey by a South African research house, Econometer Global Capital (EGC), has revealed.

Clive Mphambela/Fidelity Mhlanga

Presenting the results of the survey carried out early this year to journalists at a Harare hotel this week, head of research at EGC, Christopher Mugaga said indigenisation was a “hot topic which also raises emotion and the ire of mischief”.

The survey, titled 2013 Bankers Confidence Index was designed to gauge the views of Zimbabwe’s top bankers on three topical issues.

It sought the opinion of bank CEOs on the prospects of the banking sector in 2013, the Indigenisation and Economic empowerment policy as it relates to the banking sector as well as the regulatory environment and internal management of the banks.

According to Mugaga, 82% of banking heads participated in the survey, while senior representatives of two key stakeholders Afreximbank and the Zimbabwe Stock Exchange  were involved in the survey. Afreximbank is a major lender to Zimbabwe’s economy through lines of credit while  a number of Zimbabwean banks or their parent companies are listed on the ZSE.

“In our polls, 94% of the interviewed CEO’s believe indigenisation policy is not suitable at this juncture, while 1% said they could not comment. The other 5% saw nothing wrong with the indigenisation drive as long as there was transparency in the implementation of the programme,” Mugaga said.

However, the 5% in favour of the programme went on to argue that there was need to introduce management contracts where the day to day management of banks is left to the foreign heads while equity can be transferred to the indigenous citizens.

“The 94% went on to buttress their argument by claiming that the banking sector in Zimbabwe is already well indigenised as evidenced by the number of banking institutions owned by black Zimbabweans,” Mugaga said.

However, Youth Indigenisation and Economic Empowerment minister Saviour Kasukuwere dismissed the survey results, saying bank executives were employees who had no option but to parrot the views of their foreign shareholders in order to protect their jobs.
He argued the CEOs were not being sincere in denouncing the moves aimed ultimately at empowering employees and communities.

“What can they say, remember they are mere employees and they would be fired if their shareholders know that they are openly in support of the programme,” Kasukuwere said.

He reiterated his view that his Zanu PF- sponsored programme was the law of the land and would be implemented.

“We are not going to be told what to do by a few bank CEOs. This is a national programme that is looking at the broader interests of the economy and the future of our country and its citizens,” Kasukuwere said.

Critics of the indigenisation drive say indigenising banks will further harm the economy as foreign investors are jittery about  the whole programme.

They say foreign lines of credit will dry up as banks, particularly foreign banks, play a key role in the economy.

Kasukuwere however argued that evidence on the ground shows that all of Zimbabwe’s present active lines of credit amount to almost US$500 million have been mobilised through locally-owned banks with very little having been provided by the foreign banks.

As the debate on indigenisation of the banking sector rages on, the survey results show that 92% of the banking CEOs think the sector is robust and expressed confidence the sector will grow in the last three quarters of 2013.

However, 6% of CEOs strongly believe the elections to be held in 2013 will impact on the trajectory of the sector while only 2% feel the sector is doomed as we progress in 2013.

According to EGC, those who are pessimistic were basing their arguments on the recent introduction of memorandum of understanding which was signed between the central bank and the banks early this year.

On a scale of 0 to 10, where 0 implies the worst case scenario without any prospects for growth while 10 is the height of confidence where growth prospects are very strong, the banking CEOs in Zimbabwe have scored an average of 6 in their rating of the banking sector in particular.

Mugaga said the research also showed that 86% of the bank CEOs believe the banking sector is well managed by the Reserve Bank of Zimbabwe.

“The bankers pointed out the central bank is doing its best given the limited resources available to bring sanity and growth into the sector,” he said.

However, 10% believe the RBZ erred by introducing measures to curtail  bank profits such as the scrapping of bank charges for accounts below US$800 alongside the raising of capital thresholds to US$100million from US$12,5million saying these moves had put a lot of pressure on banks.