JANUARY lived up to its billing as the month of the “Disease”. While in the past liquidity woes would typically haunt individuals mainly during the famine of January after the feast of the festive season, lately it has become a permanent feature of our lives which not only torments individuals but the whole economy for good measure.
Financial Sector Spotlight with Omen Muza
The effects are there for all to see – not much inspiring activity in the financial sector or elsewhere.
Levelling the mobile banking playing field
The financial year started with Econet Wireless’s announcement that a transaction tax of 5c will now be levied on mobile money transactions with effect from the 1st January 2014 in line with the announcement made in the national budget statement. At the same time, Government amended the Income Tax Act to accommodate this levy imposed on mobile money transfers as part of its efforts to augment its dwindling revenue.
Consequently, a long definition of mobile banking service was inserted in the thirtieth schedule (“Intermediated Money Transfer Tax”) of the Income Tax Act (Chapter 23:06).
A “mobile banking service”, says the Act, “is a service that allows customers of a financial institution or cellular telecommunication or telecommunication service operator licensed or required to be licensed under the Postal and Telecommunications Act or other intermediary to conduct any number of financial transactions involving the transfer of money through a mobile device such as a mobile phone or personal digital assistant, and for which the financial institution, operator or intermediary involved receives a fee, commission, premium, interest or other reward.”
Where the new tax, from the point of view of banks, levels the playing field in terms of the fee structure, the amendment entrenches the Mobile Network Operators’ relentless foray into traditional banking space.
New broom at AfrAsia Bank
AfrAsia Bank Zimbabwe Limited, which has had a fairly high turnover in the C-suite over the years, saw yet another change at the very top. Former Tetrad Bank managing director Tineyi Mawocha was appointed managing director of the flagship banking unit of the AfrAsia Holdings Limited with effect from 6 January 2014.
To liquidate or not to liquidate?
Exactly two weeks after John Mafungei Chikura, the Chief Executive Officer of the Deposit Protection Corporation was granted a Certificate of Appointment by Master of the High Court as the duly appointed Provisional liquidator of Trust Bank Corporation (TBC), the bank appeared to get a lifeline from the same source as the High Court granted it three weeks to submit an opposing affidavit against the proposed liquidation.
The reprieve was apparently secured by Trust Bank’s lawyer on the basis that depositors would not support any liquidation process, but would favour the injection of capital into the bank by an investor.
Re-tendering for Homelink disposal
On January 26, 2014 the Reserve Bank of Zimbabwe notified the public that it was re-tendering for the disposal of its 100% shareholding in Homelink (Private) Limited and its subsidiaries Easylink (Private) Limited and Masterlink (Private) Limited.
The bank said the bidding process was open to all Zimbabwean citizens and locally registered companies, as well as foreigners and externally registered firms and set a deadline for submission of bids of 26th of February 2014. While no reasons were given for the re-tender, it may be due to lack of interest from suitors who meet the bank’s preferred criteria in these illiquid times.
The return of statutory reserves
Having been scrapped by the Reserve Bank in its mid-term monetary policy statement of 2010 in a move meant to improve market liquidity and lower interest rates, statutory reserves look set for a comeback, according to proposed amendments to the Banking Act. Statutory reserves are a pre-determined percentage of a bank’ deposit base held at the Central Bank as a form of liquidity buffer.
While somewhat enhancing the Central Bank’s lender of last resort function and improving the perception of stability in the banking sector, the move will likely impact adversely on the availability of credit due to its liquidity-draining effect in a market already suffering from an anaemic liquidity profile.
While Government may borrow from the proposed Statutory Reserve Fund (SRF) for purposes of financing infrastructural development, stakeholders will be concerned about Government’s ability to repay on time or at all given its dwindling revenues and a chequered history of debt servicing.