Gono hits back at Kasukuwere

THIS is the Gono’s full statement in response to the notice issued by Empowerment Minister Saviour Kasukuwere ordering foreign-owned banks to transfer majority control to black Zimbabweans within a year …

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“ALTHOUGH I’m on a business trip outside Zimbabwe and therefore have not familiarised myself with the full content of the Gazetted Notice in question, the Zimbabwean banking sector needs to be advised that there is no law that provides for arbitrariness on the part of anyone and/or expropriation of banking assets in Zimbabwe yesterday, today or tomorrow.

I will, as soon as I get back home, be consulting with and obtaining further guidance from H.E. the President Cde R.G. Mugabe on the latest moves by the Minister in relation to the sector that I superintend – the Banking Sector – and his instructions will be final in the manner in which we will proceed.

Until such guidance is received from H.E. The President, we regard the regulations as gazetted as devoid of detail and rationality as they are contradictory in many respects with existing laws in the country such as the Banking Act and the RBZ Act which stand at par with any other law in the country except the Constitution of the Republic of Zimbabwe.

Both the RBZ and the Banking Acts have not been amended to exclude the RBZ from final responsibility of running Zimbabwe’s financial sector, including determining and approving changes to the shareholdings of banks in order for such changes to be effective, the terms thereof in terms of capitalisations, compliance with the country’s exchange controls regulations, SADC central bank governors prescriptions for harmonising and integrating our regional economies as well as a host of other local subsidiary legislative requirements that deal with boards of directors, management appointments, internal bank policies and procedures for granting loans as well as a variety of other do’s and don’ts when it comes to dealing with depositors funds.

The fact that the two main proponents of the recent illogical moves have presided over the failure of their two banks before, namely Unibank and Genesis, calls for Solomonic wisdom on the part of Zimbabwe’s population and leadership. Ordinarily, anyone who was near a failed bank is not a fit and proper person to deal with banking matters or to ever own, run or talk about the ownership of a bank again until cleared by the central bank; this is a universal practice.

As the Reserve Bank, we repeat our earlier invitation to any Zimbabwean wishing to start a bank to come forward with their application and we will give them a licence to join the sector at 100 per cent ownership, rather than waste money taking over other people’s banks.

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The example of Minister of Mines Dr Obert Mpofu who came forward with his money and sought permission to take over ZABG bank which was ailing then is a case in point. We gave him two years within which to regularise the ownership structure of that bank to a maximum of 25 per cent for any single shareholder which he committed to do but for the time being he has put in money and is a 99,9 per cent shareholder.

Furthermore, it must be realized that the money in all these banks belongs to depositors and not foreigners, except the equity components which, in most cases is less than 20 per cent of the banks’ balance sheets, and, in any case, that equity is tied up in operating capital assets such as furniture, fittings, land and buildings. The rest belongs to depositors and is not, as assumed by some, profit of the banks available for sharing the next day one becomes an owner.

In addition, last year alone (2011), the entire banking sector made total profits of $70 million of which $37 million belonged to international banks. Assuming a generous dividend pay-out of
30 per cent of net profits, this translates to $5,67 million ($37mil x 51% x 30%) payable annually to the 51 per cent shareholder. The question is one of materiality over substance … you do not need to be a rocket scientist to realise that someone is trying to take Zimbabweans for a ride!

The model that I have proposed gives Zimbabweans from all walks of life and across the breath and width of this country a share of $350-400 million per annum throughout the year in supply-based empowerment which will lead to indigenisation sooner rather than later. This is apart from the fact that the model I have presented attends to “bread and butter issues” of the people – school fees, medical fees, food, water, transport, rent, airtime, seeds and fertilizers – to many as opposed to an opaque few that we see clamouring to put their own proxies as beneficiaries under the disguise of indeginisation of the banking sector.

The question then is, do we just indigenise to empower our people or we empower our people to indigenise? As Governor of the Reserve Bank of Zimbabwe and a technocrat, with genuine hard-earned qualifications in banking, finance and development economics, I have presented to the nation and the ministry an empowerment model which has the potential to lead to the ultimate indigenisation of the financial sector as more people participate, but it seems people meant to be assisted through robust and not necessarily populist thinking do not either have the time to read the models or don’t understand them at all, hence going off at a tangent.

The Governor is happy and willing to share a platform anytime with anyone wishing to soberly debate sustainable models of development in Zimbabwe, including broad- based empowerment and indigenisation models for the financial sector that benefit many as opposed to a few. Having said that though, and for the time being, the financial sector will move as if no mistakes have been made and announced through the said Government Gazette which was also done without checking with monetary authorities in the country.

Again, it has falsely and mischievously been suggested in some quarters that as Governor, I am protecting the foreign banks because I owe them huge amounts in the firm of loans given to my family business entities. Well, for the record, my family and I have had business dealings with Barclays and Standard Bank dating back to 1977 (Barclays), 1980 (Standard Chartered), 1996 (Stanbic Bank). At present, I do not owe any of these banks a single penny by way of loans or facilities.

Indeed my family companies owe millions of dollars to regional and continental banks that have extended lines of credit to local banks and through them, to my family enterprises. A substantial component of these loans are all performing though a local bank is affected by curatorship, it follows that my family business loans, through these institutions also get affected, get called-up like those of any other borrowing entity operating in a difficult environment in Zimbabwe.

However, loans extended to the governor’s family businesses are treated as any other and governor does not run the companies directly nor does do I interfere with any legal processes that may correctly or incorrectly be taken against me as co- guarantor of loan facilities to the family enterprises. This must, therefore, dispel any notion that the governor gets feared or favoured by the banks or that I am protecting foreign-owned banks as a favour to them.

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I am just as ordinary a family business person as anyone else; my family companies do try to stand on their own though without over-reliance on Gideon Gono, the Governor, for creditors. It is very tempting and exciting to sue the Governor when any of his family companies experience, like any other, difficulties to meet their commitments.

As a family we have been in business for the last 33 years and employ about 2000 people directly in sectors such as farming, agro-processing, horticulture, construction, real estate, publishing, transport, consultancy among others. We are now the third largest chicken-integrated farming operation in the country after Irvines and Cfi-Crest, all started from scratch over the last 33 years. Some people think that we own some banks around but nothing could be further from the truth!”

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