BY SHAME MAKOSHORI
A SOLID plan twinning POSB Bank’s privatisation with a maiden stock exchange listing drifted into limelight last week, as board chairman Israel Ndlovu revealed that important papers had entered final phases of diligent reviews before Cabinet approval by December.
The mass market bank, one of the country’s biggest by branch network, has been the subject of listing rumours for about 14 years.
However, such plans have flopped because POSB’s 100% shareholder, the Government of Zimbabwe, had been stuck in deadlocks over whether or not to co-own the bank, which operates through a network of 375 branches and agencies countrywide.
POSB saw the inflation-adjusted value of its balance sheet rise 10,8% to $3,2 billion (US$3,2 million) during the year ended December 31, 2020, from $2,9 billion (US$33,3 million) previously, although it posted a loss.
However, it appears a stock exchange listing is now viewed as the best strategy to enhance POSB’s attractiveness to potential investors since the privatisation agenda gained traction after reform-minded Treasury boss, Mthuli Ncube arrived at the Ministry of Finance in October 2018, promising Zimbabweans to brace for a sea of strategic shifts.
Several papers have been exchanged detailing the haemorrhaging taking place in State firms, the majority of them broke and insolvent.
In a commentary to the POSB 2020 annual report, Ndlovu did not disclose which bourse had been ear-marked for the POSB listing.
However, there has been a pronounced influx to the waterfall since the Victoria Falls Stock Exchange (VFEX) came on line in October last year, exclusively trading in foreign currency.
The Zimbabwe Stock Exchange (ZSE) is the other domestic bourse, but it has been hit by a protracted listing drought.
Ndlovu said progress towards privatisation efforts had also been achieved and both documents would be presented to Cabinet.
“The bank is one of those State entities earmarked by the Government of Zimbabwe for partial privatisation,” he said.
“In July 2020, KPMG Advisory Services (Zimbabwe) was engaged to provide transactional advisory services to the bank. In December 2020, KPMG issued the final inception report which was subsequently approved and adopted by the technical committee. At the time of preparing this report, the draft due diligence and valuation reports were presented to the technical committee members for their consideration. It is anticipated that the identification of the ideal investors and the listing of the bank on the stock exchange will be finalised and ready for recommendation and consideration by Cabinet in the second half of the year 2021,” the POSB chairman noted.
A push towards listing on the VFEX looks the best option for now, given that the ZSE only trades in the Zimbabwe dollar, which has been battered by a relentless currency black market and rocketing prices.
The VFEX’s advantage is its ability to raise foreign currency, which may come in handy for POSB, as it moves to beef up its lending capacity in the rapidly re-dollarising market.
“The general economic prospects indicate that economic growth trend will be positive in the outlook period,” Ndlovu said.
“As procurement of vaccines for the containment of the Covid-19 show promise and the vaccines are now being deployed, coupled with the measures adopted by the government as articulated in the National Development Strategy 1 (NDS1), there is hope that 2021 will bring a more certain, prosperous outlook for business . . . POSB is committed to playing its intermediary and financial inclusion role,” Ndlovu said.
Last month, Ncube said slow progress in the privatisation of State firms had become a major cause for concern in government, as he revealed authorities were planning to enact a law to accelerate reforms.
Most of the firms that have failed to quicken the privatisation process were in the telecoms sector, according to a list released by Ncube during the presentation of the midterm national budget review.