In Zimbabwe, the Bankers Association of Zimbabwe (BAZ) and Bank Employers Association of Zimbabwe represent the interests of management or employers while the Zimbabwe Banks and Allied Workers’ Union represents the interests of workers. The Reserve Bank of Zimbabwe (RBZ) takes care of the regulatory interests of the sector.
Opinion by Omen Muza
Have you ever wondered who represents the interests of shareholders? Of course it’s directors, but do they do so as an organised lot? I mean, in the sense of meeting and interacting at industry level to deliberate on issues of mutual interest and concern like the current recapitalisation drive? Of course not, because there is no known forum through which they can do so and in any case they are too divided by self-interest to be of one accord. Does it therefore not stand to reason that bank shareholders, whether directly or through their proxies in the form of directors, need a national forum through which they could actively influence their investments on an ongoing basis, outside company level fora such as AGMs or EGMs? If so what form might this forum assume? A national Association of Bank Directors, in my humble opinion, would serve the purpose. The rationale for such a body and the purpose it could serve are manifold.
Consolidation of the principle of separation of ownership from management The RBZ and Finance ministry have both been vigorously advocating for the separation of ownership and management of banks. In so doing, a centre of power — in the form of bank shareholders — stands to be alienated and banished to the periphery of industry consciousness. This power base can be harnessed to counterbalance the undue influence which both the monetary and fiscal authorities can potentially have on the sector if there is inadequate institutional capacity for appropriate checks and balances.
Continuous development The Association of Bank Directors of Zimbabwe (ABDZ) would play a critical role in raising the competence of bank directors through various development programmes such as workshops and seminars. Currently, most directors only go through induction at company level as required by the RBZ, unless they have undergone separate training such as that provided by the Institute of Directors of Zimbabwe, which is however generalised, is not mandatory and does not address specific financial industry concerns. The ABDZ would make attendance of such training a condition for continued membership.
Lobbying and advocacy Such an association would also be expected to play a leading role in policy advocacy by providing input into fiscal and monetary policy formulation.
Oversight The association would be expected to complement the efforts of the RBZ and other regulatory bodies in exercising oversight on the banking sector. Addressing delegates at the Institute of Chartered Secretaries and Administrators in Zimbabwe conference earlier this year, business consultant Slava Grace Chella reportedly emphasized the importance of strengthening the ability of private investors to exert control over banks rather than relying excessively on government regulations. In essence, she was talking about self regulation and I wholly agree with her.
An association of bank directors in Zimbabwe would not be a first in Africa. In Nigeria, a country with roughly the same number of banks with Zimbabwe, but vastly different demographic dynamics and economic growth metrics, the Bank Directors Association, an umbrella body of bank directors was established in 1997. It serves as a platform for improving the knowledge and competence of bank directors, thereby promoting best practices within the banking industry.
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The association also contributes to the development of the banking industry through recommendations and comments on policy and topical issues in the industry.
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- 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, research and training company with interests in banking, technology and agriculture as well as the convergence area among them.
