The closure of AfrAsia Bank, formerly Kingdom Bank, on Tuesday this week calls for the Reserve Bank of Zimbabwe (RBZ) as the regulator of financial institutions to step in to avoid more job losses in the country.
NewsDay comment
This came after AfrAsia decided to send its workers on a two-week unpaid leave every month as it grappled viability problems. That could have been enough to allow the RBZ to move in to stem the tide, but the central bank left AfrAsia Bank’s problems too late to save it.
What is even worse is the fact that AfrAsia is the second bank to have its banking licence cancelled due to viability challenges in just 55 days since the beginning of the year.
No doubt the country’s economic situation is as bleak as it can ever be. Zimbabweans cannot resign to fate, but heed this call for combined forces to deal with the situation, with the RBZ taking the lead.
If the central bank does not institute measures to stem the tide, the trend will spell doom for the otherwise stable financial services industry. What is disappointing though is the fact that the RBZ which monitors banking institutions is always aware of poor governance issues prevailing at most of these institutions.
Yet the regulator has always been slow in acting to fight the continued rot in the sector leaving the banking public at the mercy of unscrupulous banking executives.
And now the banking public is the ultimate loser, yet this could been avoided. RBZ needs to dig deeper to find out why the AfrAsia Bank shareholders had decided to surrender their banking licence at a time they were expected to pour in more funds into the project.
The bank’s closure could have been avoided had the RBZ heeded the tell-tale signs of poor governance bedeviling the institution given it was always facing liquidity problems.
The challenges got worse without the central bank addressing them, and the closure of the bank means more job losses. Zimbabwe already has a very high unemployment rate with university graduates reportedly taking up menial jobs to make a living.
Apart from AfrAsia and Allied Bank owned by Transport minister Obert Mpofu, Trust Bank had its licence cancelled over abuse of depositors’ funds, and in June last year Capital Bank also lost its licence.
Doesn’t this show an extremely ill economy and leadership? What is disturbing is the fact that as Kingdom Bank, in its prime, it was the epitome of a clean indigenisation dream. One wonders what happened on the way to heaven for Nigel Chanakira’s project.
Should RBZ governor John Mangudya not ask himself soul searching questions instead of resigning to fate saying the bank closures are a result of the prevailing economic conditions? How does RBZ intend to promote new indigenous entrants into the banking sector?
Mangudya must build confidence in the banking sector so that Zimbabweans can put their cash in banks.
It is clear that in the circumstances, the public no longer has the confidence to bank their money especially in these so-called indigenous banking institutions where they seem to have a smash and grab policy on depositors’ funds.
There must be some restraint and Mangudya must instill that in the banking sector. Malcontents must be removed and allow the financial services sector to grow.
Finance minister Patrick Chinamasa must also impress upon his Cabinet colleagues to support policies that promote economic growth rather than practice stone-age politics detrimental to the country and its people as is the case within the Zanu PF government.
There must be a stop to some of this madness by politicians if Zimbabwe is to move ahead.
We need a more pragmatic approach to the banking crisis in the country before it is too late.
