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April financial sector highlights

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How time flies. It’s not so long ago that we saw the end of the first quarter of the year (Q1 2017) and already we are close to halfway into the second quarter of 2017. Before we know it, it will soon be half-year, forcing us to look back and consider what we have achieved. In this instalment, we focus on the highlights of the month just gone by, which had its fair share of notable developments from the appointment of a new deputy governor Jesimen Chipika, through FMB Malawi’s audacious bid for Barclays Bank Zimbabwe to efforts to put the international re-engagement agenda — otherwise known as the Lima Plan — back on track.

OMEN MUZA

rbz

New deputy governor appointed

The month began with President Robert Mugabe’s appointment of economist and Deposit Protection Corporation chairperson Jesimen Tarisai Chipika as deputy governor of the Reserve Bank of Zimbabwe with effect from April 1, 2017 for a period of five years.

Chipika replaced Charity Dhliwayo whose second and final term expired on March 31, 2017. A former technical advisor in the Finance ministry, she also had a stint as an economics lecturer at the University of Zimbabwe from 1985 to 1998 after which from 1999 to 2001, she was the International Labour Organisation and United Nations Development Programme national coordinator. She was a member of the RBZ Monetary Policy Committee from 2013 to 2015.

NBS opens third branch

The National Building Society (NBS) opened its third branch in Chinhoyi on Wednesday, April 12, 2017 with managing director Ken Chitando revealing that the society would also open branches in Gweru, Masvingo and Mutare and have in excess of 200 agencies countrywide by the end of the year, backed by a capital budget of $1 million.

Lion Finance Zimbabwe announces arrival

Lion Finance Zimbabwe, a deposit-taking microfinance institution (MFI), announced its arrival on the local financial sector scene, touting itself as a “…a fearless developmental bank that has the capacity to offer the tools and resources towards financial stability. A bank that believes in transforming lives through financial inclusion for sustainable growth.”

Barclays Bank acknowledges FMB Malawi bid

Meanwhile, Barclays Bank of Zimbabwe issued a renewal of a cautionary statement acknowledging progress in the disposal of Barclays Bank Plc’s (BB Plc) shareholding in the Zimbabwean franchise. The bank confirmed that BB Plc was engaged in exclusive discussions with a potential purchaser in relation to the disposal, although it steered clear of naming the suitor. This gave credence to First Merchant Bank Malawi’s bid, following the cautionary statement issued earlier by the Malawi Stock Exchange-listed lender.

RBZ tackles foreign payments backlog

The Reserve Bank of Zimbabwe moved to ease foreign payments bottlenecks after it drew down $100 million under the $150 million African Export-Import Bank (Afreximbank) loan facility on 11 April 2017, at a price the central bank noted was quite reasonable — an all-inclusive interest rate of just below 5% per annum. The central bank said apart from the Afreximbank facility, the release of the funds was made possible by export earnings from green-leaf tobacco. RBZ governor John Mangudya said that the funds released into the banking sector would cater for outstanding foreign payments for productive uses, including the payment of tuition fees for Zimbabweans studying abroad.

Mangudya said that the $100 million released into the banking system would be utilised by customers with funded accounts only to avoid speculative demand for foreign currency.

Growth forecast reviewed upwards

In its latest report titled Global Economic Outlook for 2017 released during the month, the International Monetary Fund (IMF) reviewed upwards its economic growth projection for Zimbabwe to 2 percent from its earlier forecast of minus 2.5 percent made in 2016.

Earlier in March, Finance and Economic Development minister Patrick Chinamasa had also revised his 2017 growth rate forecast to 3,7%, citing an anticipated bumper harvest on the back of a good rainy season.

Bank Use Promotion Act invoked

During the month, the Reserve Bank of Zimbabwe issued a press statement on its collaboration with retailers and wholesalers on measures to enhance regulatory compliance and use of plastic money in business transactions.

The measures included enjoining retailers and wholesalers, in compliance with the provisions of the Bank Use Promotion Act (Chapter 24:24), to bank the cash generated from their businesses within 24 hours and maintain records of all transactions (including purchases, sales, discounts and bankings) as well as limiting any cash-back facility made available by retailers and wholesalers to an amount of $20.

The apex bank also pledged to collaborate with wholesalers, retailers and their associations to ensure the adequate provision of point-of-sale (POS) terminals in order to enhance the use of plastic money for transactions.

GetBucks lists first bond in 20 years

GetBucks Financial Services Limited made history by issuing $5,4 million under its $30 million Medium Term Note Programme for which the Zimbabwe Stock Exchange (ZSE) granted a financial instrument listing on April 26 2017.
This became the first bond to trade publicly in Zimbabwe, two decades after the bond market stopped operating and the listing was the first on the ZSE following approval of the listing of debt securities on the local bourse by the regulator, the Securities Exchange Commission of Zimbabwe.

ZSE settlement cycle shortened

Chengetedzai Depository Company Limited (CDC) and the Zimbabwe Stock Exchange advised capital market players, issuers of securities, investors and the general public that the settlement cycle for trades in ZSE-listed equity and debt security would change from T+5 (Trade date plus five business days) to T+3 (Trade date plus three business days) with effect from May 2 2017. The shortening of the settlement cycle was expected to further improve the capital market in Zimbabwe, through introducing international best practice, reducing counterparty risk and increasing convenience for the investing public.

Bonus payment emblematic of fiscal crisis

Civil servants were set to be paid their 2016 annual bonuses starting the 27th of April 2017, almost half a year after they became due, as government continued to stagger the payments until all civil service sectors were covered.

International re-engagement back on track

Meanwhile, the Finance and Economic Development minister Patrick Chinamasa issued an update on Zimbabwe’s Reengagement Programme in which he revealed that government had met all the conditions precedent to the repayment of debt arrears to the World Bank and the African Development Bank.

Clearance of debt arrears was expected to attract — in the short to medium and long term — foreign and domestic investment, given perceptions of lower country risk, and would be expected to open the door to possible debt treatment by the Paris club and the non-Paris Club bilateral creditors through an IMF financing programme.

Omen N. Muza is the Founder and Editor of the MFSB. You can view his LinkedIn profile at zw.linkedin.com/pub/omen-n-muza/30/641/3b8 or initiate contact on omen.muza@gmail.com.

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