By Eben Mabunda
A HUNDRED percent owned by the government of Zimbabwe, the People’s Own Savings Bank (POSB) has made significant advances toward partial privatisation, a culmination of the government’s efforts to privatise the bank as indicated at the end of fourth Quarter of 2019.
As part of its privatisation efforts, the bank is currently working on plans to list on the Zimbabwe Stock Exchange — a market that has not enjoyed any Initial Public Offering since 2018.
As part of the privatisation plan, POSB’s transactional advisors: KPMG Advisory Services (Zimbabwe) recently issued the final Inception Report which subsequently got a nod for adoption by the technical committee. Notably, the identification of the ideal investors and pitches for the listing of the bank on the stock exchange will be finalised and ready for consideration by Cabinet before the close of 2021. The initiative is meant to rid the State Owned Enterprise (SOE) of operational inefficiencies and give the entity the leverage to access more funding and recapitalise its operations. Listing on the ZSE will likely create value for prospective investors, position the bank to compete against other players and allow a certain degree of decision-making independencetoward profitability.
Taking a walk down memory lane; in 1999 the People’s Own Savings Bank Act was established as a corporate body in accordance with the People’s Own Savings Bank of Zimbabwe Act. In 2001, the Zimbabwe Posts & Telecommunications Corporation (PTC) was split into four independent entities: NetOne — a mobile network operator, TelOne — a voice communication and internet service provider, Zimpost — a postal letter carrier and POSB — a savings bank. Maintaining 32 brick and mortar branches across the country and 200 agency branches through Zimpost, POSB serves 400 000 retail and corporate customers by offering them individual, corporate, mortgage, SME and agribusiness, and microfinance loans. POSB posted net profits of ZW$352 million (US$4,1 million) and ZW$77 million (US$900 000) for 2020 and 2019 respectively in historical terms, scooping the 2019 Banks and Banking sector awards 1st Runner award for having demonstrated a turn-around in the bank’s strategy. However, in inflation adjusted terms, POSB reported annual losses of ZW$435 million (US$5 million) in 2020 and ZW$600 million (US$7 million) in 2019.
Looking at the wider banking sector as at December 2020, POSB constitutes 0.95% of the total banking sector loans valued at ZW$84,410 billion (US$986 million). POSB’s loans position stood at ZW$804,546 million (US$9,4 million).
Value of deposits at ZW$1,742 billion (US$20,4 million) represented 0,83% of the cumulative banking sector’s position of ZW$208,9 billion (US$244 million). The bank’s asset position stood at ZW$2,902 billion (US$34 million), again making up 0,83% of the banking industry’s total value. In the six months to June 30, 2021, the ZSE rallied by 134,98% gains which compared to 677,45% gains recorded in the corresponding period in the prior year. Gains in the prior-year period were mainly driven by inflation hedging, given hyperinflation.On a Year to Date (YTD) basis to August 12, 2021, the ZSE has firmed over 160% in the local currency and over 150% in USD terms — the highest gains in Africa.
The ZSE is trailed by the Ghanaian, Zambian and Namibian exchanges, which are up over 37%, 30% and 25% respectively in USD terms.Remarkable privatisation stories dating back to the 1990s are a part of our economic history! The Dairy Marketing Board was privatised in 1997 to form Dairibord Zimbabwe while the Cotton Marketing Board was commercialised in 1997 to form Cotton Company of Zimbabwe (Cottco). In 1999 the government sold its controlling stake in ZimRe Holdings and the entity fruitfully unbundled to give birth to Fidelity Life and NicozDiamond. In 1997, the government sold off its majority stake in the Bank of Credit and Commerce (now CBZ Holdings) — housing Zimbabwe’s largest bank by asset base. Zimpapers and the Rainbow Tourism Group are also a part of the bracket. POSB’s privatisation could yield positives in the medium term.
- Mabunda is an analyst and TV anchor at Equity Axis, a leading financial research firm in Zimbabwe. — email@example.com