In a month in which death robbed us of Paul Mkondo, the fated insurance guru who — through his insurance radio programme — epitomised the way in which the financial sector should seek to engage with its targeted clientele; a month in which IPEC directed SFG Insurance to shut up shop on account of insolvency and shareholders’ failure to recapitalise it, there was not much to bring good cheer and quite a few things to mourn about.
Financial Sector Spotlight with Omen Muza
But there had to be something to celebrate.
We celebrated the African Union’s golden jubilee; Parliament finally passed the Micro-Finance Bill and the Securities Amendment Bill, both of which seek to bring order to the financial markets.
This article reviews four of May’s other highlights.
FBC Holdings Limited’s silver lining
United States-based private equity firm Equator Capital was reported to be nearing a deal to acquire a 10% equity stake in Zimbabwe Stock Exchange (ZSE)-listed financial group FBC Holdings Limited as part of the latter’s recapitalisation process, following an abortive move to raise cash by selling a 58% stake in Turnall Holdings Ltd.
It was also reported at the same time that another United States- domiciled investment management firm Consilium Investment Management had acquired 4% of the banking group’s total issued share capital.
FBC is considered one of the most stable banking stocks on the ZSE and well-placed sources said Consilium still had appetite for more shares in the group.
This, together with recent equity investments by three European investors in NMB Holdings Limited, illustrates that it’s not all doom and gloom for banks on the foreign investment front as some of them still have onshore and offshore options for raising capital.
It also illustrates that if businesses are well-managed, they can rise above the haircut imposed by sovereign/country risk to attract foreign capital.
Just as well, because no matter how muddied the investment waters, there are some intrepid ones out there who will always see through the fog and seize opportunities which the fence sitters can’t see from their non-committal vantage points.
This reminded me of what Peter Schmid, a partner at Actis once said.
“The successful investor is able to recognise real risk versus its imposter — those shadows that melt away when confronted by clear logic and rational thought… Don’t let a perception of risk blind you to potential; properly managed, the risk comes to be seen for what it truly is: an opportunity.”
Former Old Mutual Zimbabwe CEO Luke Ngwerume once also echoed the same sentiment: “Our view is that Zimbabwe has one of the brightest investment outlooks in the emerging markets and indeed in the world. As you will appreciate, this bright investment outlook also comes with risk and our risks are complex to the point of blurring the investment opportunities to some people,” he enthused.
“Mush’s” unfinished business
Tomorrow, May 31 2013, Elisha Mushayakarara leaves ZB Financial Holdings Limited (ZBFHL) after an eventful 20 years in which he managed to build the company into a diversified financial services group.
From outside, we see a systematic, smooth handover of power, which is commendable.
However, his major regret must be that his tenure did not last long enough for him to see the group being removed from the USA’s OFAC sanctions as happened to Agribank and IDBZ.
It must also be gnawing at his guts that he leaves at a time when Nicholas Vingirai and his allies have launched a legal offensive seeking to reverse ZBFHL’s 2008 acquisition of Intermarket Holdings Limited (IHL), something with potentially legacy-dismantling consequences.
Nevertheless, FSS congratulates Mushayakarara for opting to pass on the baton. While the debate on succession has tended to be restricted to the political arena, Mushayakarara’s departure decidedly pushes the debate on the tenure of business leadership in Zimbabwe to the fore.
Banks finally doing what needs to be done
The month of May finally saw banks begin to do what they should have started doing a long time ago — rallying behind Zimswitch as one way of checking the resolute march of EcoCash into traditional bank territory.
In April when I wrote about the great EcoCash debate, a banking executive remarked that the market manoeuvres of EcoCash were a threat to ZimSwitch and called for counter-measures by banks acting as a consortium.
So I wasn’t surprised to see an advertising campaign calling on the transacting public to “Get Back to Where You Belong”, highlighting the 18 “Banks United via Zimswitch” and outlining the role of Zimswitch in the economy.
It further invited the banking public to “Transact Anywhere, Anytime through Zimswitch.”
Zimswitch especially needs the support of those among our banks which have invested heavily in ATMs and point of sale terminals.
Coercive ZSE listings for banks
Lastly, during the month, Finance minister Tendai Biti said that government would soon enact laws requiring all banks to list on the ZSE to help them raise capital.
He added that the proposed laws are meant to help prevent future bank failures.
At face value, this looks like a fantastic idea, but on second thoughts, it sounds to me like a classic case of the surgical approach of placing more emphasis on regulatory reform while neglecting other key facets such as corporate governance, sovereign risk and the impact of indigenisation, which also contribute to bank failures in one way or another.
Besides, is this not also a case of pre-empting the current capital raising process being championed by the RBZ before it runs its course — unless the good minister knows something we don’t?
Feedback: firstname.lastname@example.org. Omen N. Muza writes in his personal capacity. You can view his LinkedIn profile at zw.linkedin.com/pub/omen-n-muza/30/641/3b8