Leading South African bank, Rand Merchant Bank says it is not just indigenisation that foreign investors are afraid of but a raft of issues surrounding security of investment in the country.
Rand bank’s business development director for banking in Africa, Tony Lerdele, told participants at a Financing Cross-border Trade and Investment projects Roundtable in Bulawayo on Tuesday that his bank pulled out of a deal to buy stake in a local financial institution because of issues surrounding security of investment in the country.
“It’s not just indigenisation but other issues of security. The South African regulator believes that it is too risky at the moment to invest in Zimbabwe, so it is better to wait until things are ok and Zimbabwe gets a rating.
“We don’t fear that (indigenisation law) at all because we listed in Botswana on that agreement. We don’t see that as much of a threat,” he said.
Lerdele earlier on told participants that the South African bank had been invoved in extensive negotiations to buy a stake in a Zimbabwe bank but the uncertainty surrounding the indigenisation policy made them pull out.
“In the interim we are doing briefcase banking and recently signed a deal with Unki Mine to fund platinum mining to a tune of $10 million. Funding is possible,” he said.
Lerdele said his banking group had a presence in the entire sub-Saharan region, excluding Zimbabwe, but were looking forward to the opportunity to open a branch in the country.
“We would like so much to play in the Zimbabwean space especially under infrastructure development,” he said.
Speaking at the same event economist Eric Bloch said there were chances that the Zimbabwean economy can attract investment.
“There are many Zimbabweans who feel that things will never be right and feel that they should close their businesses. I want to state categorically that they are wrong. Zimbabwe will recover, albeit slowly. Short-term fundings to banks are improving and although the interest rates are very high, they are not prohibitive.
“Don’t assume that because Zimbabwe is illiquid you cannot access funding, you can if you work hard at it,” he said.