Last week I hazarded attending the Affirmative Action Group (AAG) Symposium titled Banking for Broad-Based Economic Empowerment and Prosperity. I use the word “hazarded” because it characterises exactly how I initially felt about attending the symposium — apprehensive. I really didn’t know what to expect given the AAG’s rabble-rousing reputation of years gone by and the leadership wrangles that shook the group not so long ago. In the end a quick phone call to a well-placed insider in the banking sector, who had the lowdown on the event was what it took for me to muster the courage to attend. If the Bankers Association of Zimbabwe (BAZ) and the Reserve Bank of Zimbabwe (RBZ) agreed to take part, it had to be a forum for constructive engagement. As it turned out, I was neither disappointed nor regretful. In fact, I was quite enthused by the desire of the stakeholders to work together for the greater good.
Keith Guzah, the national president of the AAG set the tone of the symposium with a hard-hitting chronicle of how banks are allegedly perpetuating policies that are inconsistent with rules and reality on the ground and how the sector is driven by “old fashioned models that are totally disconnected from reality”. He accused banks of being old wine in new bottles, new in name and ownership only, but old in their banking practices. He sang the usual song of high interest rates, punitive bank charges as well as stringent lending conditions while decrying the death of the “old” culture of interest accruing on savings deposits. He challenged banks to develop relevant products that meet the real needs of borrowers. He was also concerned that the country was benefitting enough from the presence of the likes of Barclays, Standard Chartered and Stanbic, whom he said he considered local banks by virtue of doing business in Zimbabwe; hence they should not be called “foreign” but rather “international banks”.
While acknowledging the concerns of the AAG, RBZ governor Gideon Gono emphasised the importance of the banking sector as a custodian of the banking public’s money hence the need for the highest levels of prudence. He warned that before there is a complete understanding of what a bank is, a coherent debate on indigenisation of the banking sector is not possible. He challenged those clamouring for an indigenised banking sector to apply for licences so they could own 100% of banks and do as they pleased, instead of seeking to destroy current banks. The future needs strong banks, he contented. Stakeholders should recognise that indigenisation is not an event but a process and indigenisation does not necessarily translate to empowerment. Most importantly, those who have been empowered have a responsibility to empower others, instead of continuing to line up — as individuals and “consortia” — at all new feeding troughs at the expense of the impoverished majority.
Gono took the opportunity to advocate for the supply-chain-based model of economic empowerment. Despite inordinate focus on the equity approach to the detriment of the procurement approach, the latter model stood to benefit indigenous Zimbabweans faster and in more sustainable ways than the latter, he argued. To illustrate his point, he noted that of the $70 million profit recorded by the entire banking sector in 2011, only $19 million was attributable to foreign banks, and of that an even smaller amount was available for distribution to shareholders. An interesting aspect of the symposium was the unmasking of a group of six people who tried to “occupy” Stanbic Bank and claimed 30% of the bank in typical jambanja style. Yet, according to the governor, the jambanja should be about competition to create new wealth, instead of merely scrambling to redistribute old wealth. The RBZ governor assured stakeholders the principle of earning interest on money was not dead, but he would not pre-empt developments by making an announcement. Instead, he wanted to give the BAZ an opportunity to come up with initiatives to address current challenges so he could make an announcement within the next 14 days. In closing he urged stakeholders to be orderly in their conduct and to be clear about what they want without seeking to destabilise a sector that is so critical to the development aspirations of the country. For his part he committed that banks would support dialogue as long as programmes were realistic, sustainable, technically feasible and broad–based.
From the look of things, BAZ president George Guvamatanga is man of few words. His message at the symposium was that the BAZ has a responsibility to engage, inform and educate and is supportive of broad-based empowerment programmes. Like Gono, he voiced the opinion that stakeholders tend to look for opportunities in the wrong places when it comes to the indigenisation agenda. In order to illustrate that funds in banks don’t belong to banks, but to depositors, he noted that of the balances held by banks at as March 31 2012, a whopping 89% represented depositors’ funds while only 11% was shareholders’ funds.
One of the highlights of the symposium was probably Guvamatanga’s rhetorical question: “Do we indigenise our economy to empower our people or empower our people to indigenise our economy?”
What is your take on the indigenisation of the banking sector? Weigh in with your insights on [email protected].
Omen N Muza writes in his personal capacity. He is a banker and managing director of TFC Capital (Zimbabwe) (Pvt) Ltd, a Harare-based financial advisory company with interests in banking, technology and agriculture as well as the convergence area among them.
