Ecobank Moves to Zimbabwe Despite Indigenisation Laws

Ecobank buys investment bank
Ecobank is one of Africa’s leading banks

AFRICANGLOBE – Nigeria’s Ecobank International says it plans to grow its Zimbabwean portfolio despite policies by that country’s government that require foreign banks to cede more than half of their shareholding to locals under empowerment laws.

The Pan African banking conglomerate, originally from West Africa, acquired a 70 percent stake in Premier Finance Group and has in the past two years injected $19.8 million into Ecobank Zimbabwe Limited (EZL).

By December the bank had nine branches in Zimbabwe and is embarking on a national expansion programme by opening branches in strategic locations.

A total of 11 outlets are targeted by year end.

Last week, the newly-appointed CEO and managing director Thierry Tanoh said the bank was committed to complying with all regulatory requirements in countries in which it operated, including Zimbabwe’s indigenisation regulations.

“We have complied with the new capital requirements, we are compliant. We have ambitions to grow and gain market share in Zimbabwe,” Tanoh told reporters in Harare.

Under the widely popular indigenisation laws, Zimbabwe has directed that all foreign companies cede 51 percent to locals.

The exercise started in the mining sector and is targeting banks, which are seen to be resisting the directive.

Just last Friday, Youth Development, Indigenisation and Empowerment Minister, Saviour Kasukuwere said there will be “no sacred cow spared, no stone unturned” to ensure all firms comply.

“I would like to encourage other companies, particularly in the banking sector, to comply with our national laws as non-compliance will no longer be tolerated,” he said.

But Ecobank is confident it will ride the storm and hopes to make the banking sector more competitive, as it is expected to leverage on its existence in 30 African countries to secure funding for the Zimbabwean market.

The Zimbabwean market is constrained by serious liquidity challenges and well-capitalised banks have got an advantage over others.

The group is targeting a total capital base of $2 billion but its capitalisation stands at $1,8 billion.

The central bank raised the minimum capital requirements for both merchant and central banks to $100 million under a phased re-capitalisation plan.

Banks were required to have raised $25 million by December 2012 before full compliance by June 2014.