BancABC deal introspection


A LOT of ink has already been spilled by many analysts commenting on ABC Holdings’ Atlas Mara deal so my two cents worth does not in any way seek to analyse the deal itself, but the general reaction to it.

Financial Sector Spotlight with Omen Muza

I must, however, start by duly congratulating Doug Munatsi’s team and their advisers for pulling this one off under the circumstances.

Amazed by this feat, some people have been asking the rhetorical question: What does Bob see in Zimbabwe?” in apparent reference to Bob Diamond, the ex-Barclays man who is spearheading the transaction on the investor side.

If we are to be honest with ourselves, that is not entirely the right question to ask. Let’s not forget that Bob is actually negotiating the deal with a Botswana-based entity which happens to have an operating subsidiary in Zimbabwe.

While there is no doubt that the local unit contributes significantly to group results and will in relative terms benefit considerably from the largesse of Atlas Mara, the material chunk of sovereign risk which Bob and company assumed through this deal is not entirely Zimbabwean, but notably that of Botswana and the other African countries in which the group now operates.

That is why the group has a primary listing on the Botswana Stock Exchange and a secondary listing on the Zimbabwe Stock Exchange.

That is also why the annual general meeting of the shareholders of ABC Holdings will in a few weeks’ time — on June 3 to be precise — be held in Gaborone and not Harare.

Investment-wise, Zimbabwe is notoriously not without risk and even if the question of what Bob saw in Zimbabwe was a valid one.

As an investment banker, he is definitely quite familiar with the risk-return trade-off and should not have to be congratulated for doing exactly what is expected of him – taking calculated risks.

So instead of erecting some sort of pedestal around him and lauding Bob for his investment instincts or acumen, the real people we should be lauding are Munatsi and his team, who many years ago had the foresight to diversify country risk and invest not only in Botswana, but other African countries to create a Pan-African business platform.

For creating the conditions that made it possible for Bob’s hot investment knife to slice through the butter of this deal, they are the real heroes.

ABC was one of the first companies to operate as an International Financial Services Centre (IFSC) company, under the newly-amended Income Tax Act in Botswana, a status which comes with a liberal tax environment, no foreign exchange control and access to global capital markets at competitive rates.

Since I engaged with the case of ABC Holdings about seven years ago as part of A Study of the Critical Success Factors and Drawbacks for Cross-Border Investments: A Case for the Banking Sector in Zimbabwe in partial fulfilment of my Masters in Business Management Studies with Nottingham Trent University, I have always closely followed developments at the banking group and have come to genuinely admire the proactive nature of management’s strategic initiatives.

There is always something cooking or unfolding at ABC.

I think a more useful question — which though rather uncomfortable is actually quite helpful from a diagnosis perspective if we intend to improve Zimbabwe’s investment prospects — should be: Would Bob Diamond & Co have given ABC as much as a cursory glance if it wasn’t part of a Botswana-based Pan-African entity?

I believe that part of the major attraction/incentive of this deal to Atlas Mara was the Pan-African network of ABC Holdings which diversifies the substantive nature of risk away from Zimbabwe’s excruciating operating environment.

In order to further put things into perspective, another sobering question to ask is whether ABC Holdings would have grown the way it has over the years had it remained wholly domiciled in Zimbabwe? It would be interesting to hear what Munatsi himself has to say about that.

So, what’s my point? Let’s not abdicate our responsibility by deliberately understating the country’s true risk profile; otherwise we lose the opportunity of dealing with the real causes and not just the symptoms.

We are by all means free to leverage on such transactions for purposes of convincing potential suitors that investment-wise, we are not so ugly after all, but when we look at ourselves in the mirror during our private moments, we must be honest enough to recognise the warts that need our attention.
Munatsi and company saw those warts many years ago and decided to do something about them.

Now they look much more beautiful in the eyes of suitors like Atlas Mara and while they know that they are beautiful, they don’t go about flaunting the beauty – suitors now just can’t help noticing it.

Without bursting anyone’s bubble, we have to be more serious about creating a more conducive environment for investment instead of — by implying that there is something which investors must necessarily “see” in us – claiming that we are already beautiful when we are only potentially beautiful.

If we are honest to ourselves, the Atlas Mara deal is not so much a cause for celebration, but for introspection. It’s not too late to learn the same lessons the ABC team learnt the hard way many years ago, and if we learn them well, we will be well on our way to creating conditions for replication of similar deals in the not-too-distant future.

lFeedback: Omen Muza writes in his personal capacity. You can view his LinkedIn profile at


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