Banking sector makes huge strides The Zimbabwe National Chamber of Commerce past president Mr Trust Chikohora said before Independence in 1980, the local banking industry was dominated by foreign-owned financial institutions, which trend now has been transformed by the Government.

Oliver Kazunga-Senior Business Reporter

ZIMBABWE’S banking sector has achieved significant strides through the growth and development of indigenously-owned financial institutions since the attainment of Independence in 1980, economic analysts have said.

A case study by scholar Kunofiwa Tsaurai in his research study titled “Dynamics, Challenges and Transformation of the Banking Sector in Zimbabwe” established that poor savings culture, high lending rates, systemic risk and absence of lender of last resort were the major challenges faced by Zimbabwe’s banking sector. 

Moreover, he found that inflation, reserve ratio requirement, lending and deposit rates, output and economic growth played an influential role in determining Zimbabwe’s banking sector profitability. 

The study urged the Zimbabwean authorities to design and implement policies that continue to grow the economy, ensure that depositors receive better interest rates, increase savings mobilisation and FDI inflow attraction efforts in order to promote banking sector development. 

“Inflation and trade openness had a negative but non-significant impact on Zimbabwe’s banking sector development. The authorities should therefore keep both inflation and trade openness at lower levels in order to deepen the banking sector,” reads an excerpt from the research results. 

As the country celebrates 44 years of Independence on April 18, this year, economic analysts have commended the Government for implementing policies that have seen the emergence of indigenously-owned banks —  something that never existed during the colonial era.

So far, the country has a total of 19 banking institutions with 14 of them being commercial banks, four building societies and one savings bank.

The Indigenous-owned banks include FBC Bank, Steward Bank, Time Bank, MetBank, ZB Bank, and National Building Society. The Government holds the largest stake in CBZ Holdings, which owns CBZ Bank.

The Zimbabwe National Chamber of Commerce past president Mr Trust Chikohora said before Independence in 1980, the local banking industry was dominated by foreign-owned financial institutions, which trend now has been transformed by the Government.

“There has been a huge transformation in the banking sector as we now have indigenous-owned banks that have emerged over the years since Independence in 1980, so there has been a huge transformation of the banking sector in as far as indigenisation of that sector and what comes out of that in terms of the loans indigenous people can get and the growth of the SMEs (Small-to Medium Enterprises) sector coming out of that.  

“So, the indigenisation of banking is something that can be celebrated,” he said.

In terms of the capitalisation levels of the banking sector, Mr Chikohora lauded the Reserve Bank of Zimbabwe’s efforts saying in recent years no bank failures have been recorded although in the early 2000s to 2004, several indigenous-owned banks collapsed.

“But I think after that, the Reserve Bank has been on top of the situation and the banking sector has been stable,” he said.

Some of the financial institutions that collapsed in recent years include Barbican, Intermarket, Genesis Investment Bank, Interfin, Royal Bank, and Zimbabwe Allied Banking Group Limited, among others. The collapse of the institutions was largely attributed to lack of corporate governance.

In a separate interview, Mr Luxon Zembe said in the early years of Independence the involvement of indigenous Zimbabweans in the banking sector came through a steep learning curve, which then led to the turbulence that took place in the early 2000s as several indigenous-owned banks sunk.

“We have not been exposed to running financial institutions and what it takes to run a financial institution, and more usefully coming through Independence and beginning to really being exposed to managing money in large sums.

“That was a normal developmental learning process that you get in any particular industry where people who have not been players in that particular industry are exposed for the first time,” he said. 

“So, we went through hard lessons and painful ones for that matter and this led to huge losses to all of us when most of those financial institutions folded.”

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