BY FIDELITY MHLANGA
THE Zimbabwe Coalition on Debt and Development (Zimcodd) has warned against government’s plan to privatise the mass market financial services powerhouse, People’s Own Savings Bank (POSB), saying the transformation may work against financial inclusion.
The state-owned bank was one of several parastatals that have been earmarked for privatisation under a plan unveiled by Finance Minister Mthuli Ncube in 2018, which will see private capital flowing into firms like Air Zimbabwe and telecoms firms, TelOne and NetOne.
But in a report released this week, Zimcodd warned of several setbacks if POSB is transferred to private investors.
“With 460 000 customers countrywide, POSB has about 20% of the market share making it the leader in customer base of all Zimbabwe’s banks,” Zimcodd said in its report.
“POSB’s infrastructure and distribution network has the reach that no other bank has and this needs to be preserved. The poor, pensioners, youth, informal sector traders and ordinary men and women have banked with this grassroots-based bank on the basis of trust in the bank’s people centred ethos. This explains in part why the Banks and Banking Survey of 2018, confirmed the POSB as the best performing bank in terms of efficient utilisation.”
“The (POSB) Act’s intention is for the government to defend citizens’ long-term financial interests in a volatile market economy through mechanisms such as a bank dedicated to serving the public interest. Zimcodd calls upon the Parliament of Zimbabwe to safeguard the autonomy of the POSB and to provide critical oversight to ensure that the bank remains faithful to its public mandate. Instead of privatising POSB, government should increase the autonomy for this state-backed bank and enforce strict regulatory oversight by the banking supervisor,” Zimcodd said.
In its financial results for the year ended December 31, 2020 POSB said the privatisation strategy was progressing, with transaction advisors KPMG Advisory Services already issuing a final inception report.
It said the report had been approved and adopted by a technical committee appointed to oversee the transition.
Zimcodd said selling off part of the government’s stake in the bank would not be the only way of enhancing POSB’s capacity to fund businesses.
“Government of Zimbabwe must present clear evidence of the proposed benefits of the sale for public scrutiny and Parliamentary debate. There is no justifiable need to sell off the POSB. It is presently one of the few profitable and efficiently managed, State-owned Enterprises,” Zimcodd said.
“This objective fact undermines government’s argument that privatisation would foster increased competition, which would reduce the cost of financial intermediation and improve bank profitability. Why should the People’s Own Savings Bank become profitable in the hands of other owners, not the people of Zimbabwe?”
Instead of selling off the Bank, Zimcodd pointed out that the government must further capitalise the bank’s expansion and modernisation for improved efficiency and competitiveness. Just as government has deployed taxpayer’s money to assume debts and rescue preferred industries, it is time that government deploys public money to safeguard the only remaining banking institution created in the public interest,” Zimcodd said.