AFRICANGLOBE – Foreign banks in Zimbabwe may have put behind them worries over the country’s indigenisation policy, with Empowerment Minister Francis Nhema saying last week that all of them – except one – had now agreed to transfer majority shares into the hands of Black Zimbabweans.
The international and regional banks in Zimbabwe include Standard Bank, Barclays, Nedbank and Standard Chartered. Other foreign banks in the country such as Ecobank and Old Mutual’s mortgage lender, CABS, are reported to have complied with the policy.
However, informed sources in Zimbabwe said on Friday that relations between the executives of foreign banks and the government “are not at their best”.
Most of the international banks operating in Zimbabwe refused to comment on the issue during the week. Kate Johns, the spokeswoman for Standard Bank, said: “Standard Bank and Stanbic Zimbabwe continue to engage in the dialogue of indigenisation and empowerment.”
Standard Chartered Bank Zimbabwe spokeswoman Lillian Hapanyengwi also declined to comment.
Fund managers and economists claim the indigenisation policy, which requires foreign-owned companies to transfer majority stakes to Black Zimbabwean groups, is hurting the country’s prospects to attract investments. Investment inflows into Zimbabwe during the first half of the year declined from $165 million (R1 billion) to $67m.
“Although there has been progress on the issue, relations between the government and bank chiefs are not at their best. The government wants banks to lend more, but the bank chiefs say there is too much risk… and the indigenisation issue has been a major sticking point of heated discussions,” a reliable source said.
Nhema said the government was finalising processing of the foreign banks’ compliance plans. He said the government was happy with the indigenisation compliance proposals.
“Most of the banks have complied and we are happy, it is now more on us to process the papers. As of now, we have one which we are discussing… [while] the others have put down their plans and we are happy,” Nhema said.
The government was now “discussing the plans with (the outstanding bank)”.
Concerns over Zimbabwe’s indigenisation law have largely been attributed to Barclays’ unit being left out of a deal that saw South Africa’s Absa group acquire most of Barclays’ Africa operations.
Zimbabwe’s banking industry has been facing troubled times, with financial institutions hobbled by short-term and demand-based deposits, as well as unserviced loans.
Disposable incomes had also gone down and the economy had increasingly become informal, resulting in most financial transactions being carried out outside the banking system, an economist claim.
“Banking is not one of the most attractive sectors during times of economic difficulties. Payments and transactions are carried out in other channels other than banking because of the informal nature of the economy and this heavily impacts on interest income for the banks,” economic analyst Johannes Kwangwari said.
Foreign companies have to transfer shares to employee share ownership schemes, community share ownership schemes and other Black Zimbabwean groups. Indigenisation of the banking had been problematic, with government officials previously clashing over compliance thresholds.
However, Finance Minister, Patrick Chinamasa, said last month that the empowerment was flexible and allowed for sector specific enforcement.
Most institutions in the banking sector have been urged to dilute their shareholding to meet capital requirements and to rise above the current liquidity constraints.
This had spurred the Afreximbank to chip in with a $100m facility to support the country’s interbank market.
By: Tawanda Karombo
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