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Reserve Bank of Zimbabwe (RBZ)

Robert Zhuwao Correspondent
More than 2 000 Zimbabweans have had their houses auctioned by the Sherriff of the High Court of Zimbabwe to recover $700 million owed to banks. To mitigate the loss of people’s homes and also liquidate banks whose operations were being hamstrung by non-performing loans, in 2014 the Reserve

Bank of Zimbabwe set up a special purpose vehicle called Zimbabwe Asset Management Corporation (ZAMCO), which took over secured non-performing loans which had reached 18,5 percent in order to create free funds to productive sectors of the economy.

By December 2015 ZAMCO had acquired $242 million in non-performing loans reducing the non-performing loan ratio to 13 percent. While the ZAMCO facility gives the beneficial business breathing space, one wonders how these businesses will recover to honour their obligations to ZAMCO in the absence of funding to kick start operations through working capital. As is, the facility is a stay of execution from the prophet of doom, the Sheriff of the High Court of Zimbabwe who also makes commissions from the sales. Despite the banks having been relieved of the non-performing loans and not being owed anything by the customer anymore. They still refuse to fund the resumption of the businesses leaving the businesses in the same state they were before the ZAMCO facility.

Given the magnitude of the property losses, there is need to critically look at the business environment prevailing for Zimbabwean businesses. It is common knowledge that such properties are auctioned at often low prices below the forced sale values.

Allegations of bank executives colluding so that indigenous businesses lose their properties are not new in Zimbabwe. The role banks play in Zimbabwe’s business development needs to be investigated. High default figures of such magnitude in a small economy as Zimbabwe simply cannot be ignored. While some may be belligerent bad business people with poor business practices, most are victims of a poor performing economy and bank ensnarement.

Banks have not been playing a role that ensures growth of the indigenous business. Instead they have been playing the role of the grim reaper of black owned businesses. At law, when they auction peoples’ houses, they will be armed with court orders. However, it should be noted that they are able to get these court orders which are usually default judgments because the business owner will be too broke to hire a competent lawyer to defend themselves.

Banks in Zimbabwe are setting up Zimbabwean businesses to fail. Their inadequate service delivery has no recourse for the customer. The Bankers Association of Zimbabwe (BAZ) is more of a gentlemen’s club for the banks seeking to safeguard their interests. A customer has got no recourse with regards to abuse or unfair business practices they may experience at the hands of a bank.

BAZ list their objectives as:

1. To provide a forum for the consideration of matters of policy and mutual interest concerning member banks

2. To act as a medium for communicating with the Zimbabwe Government, Reserve Bank of Zimbabwe, The Securities Commission, the Committee of the Zimbabwe Stock Exchange, other public bodies and Associations, the Press, the general public, in conveying to them the views of member banks on matters affecting the activities of the banks; and

3. Interacting with other reputable financial organisations, regional and international Banking Associations, Regional and International Financial Institutions to draw on best practices, financial resources any other support they can lend to local institutions to advance the banking industry.

4. To deal with, advance and promote all matters of common interest to member banks and to foster healthy sustainable cooperation amongst them.

While BAZ sought to address consumers needs through one point in their document that outlines their objectives where they have an adjudication committee, unlike the credible Law Society of Zimbabwe, the Adjudicator (Ombudsman) has not reported of any cases where they have resolved a banks’ customers mishandling by any one of their members. The banks themselves do not even advise their customers of what remedial action one can take if they feel aggrieved by their handling of the customers needs.

Banks in Zimbabwe operate unfettered with no monitoring as to the customers rights. Unlike the Law Society of Zimbabwe, which has successfully been able to protect clients from lawyers who would have infringed on the rights of the client. Such berth has resulted in Mafioso tendencies by some banks. Government needs to urgently launch an enquiry as to how so many black businesspeople are losing properties to the tune of $700 million. Are we to assume all these victims are bad business people? Banks are going to remain a Mafioso cartel for as long as there are no mechanisms that govern and protect customers’ rights.

The role of Government policy needs to be critiqued to enable the success of Zimbabwean businesses. To assume that the 2 000 plus Zimbabweans who have lost their homes and dreams for their kin are bad businesspeople would be ludicrous. Most are victims of circumstances whilst some may not have been paid for goods or services extended to government ministries which would not be resourced fully. The empowerment of a nation needs to be consolidated with the enactment into law of the Consumer Protection Bill to call banks to account for their actions.

The government is trying to implement policies that they deem will empower the Zimbabweans in a polarised economy where the banking sector may say the right things amongst government officials yet act to the contrary on the ground.

Inconveniencing a bank costs a customer money in interest, withdrawing your money costs the customer in bank charges, keeping your money in the bank costs the customer in bank fees. The irony of it all is if the bank fails to avail the customers’ money, the customer has no recourse. The effect of the current cash shortages on cash businesses is devastating to the Zimbabwean businesses, which rely on cash transactions and they have no recourse. Those that are operating with borrowed funds continue to be levied interest above the cash sale losses they are incurring.

Our economy is haemorrhaging severely due to our own deeds and as a businessman, I will seek to uncover what lays beneath the underbelly. What lies beneath the underbelly is what is killing Zimbabwean businesses as Zimbabweans are not folly enough to risk their properties on businesses that will not yield returns for them. Foreigners continue to dominate the reserved sectors of our economy while the whole country knows that they do not deposit money into the banking system.

A simple visit to any banking hall in the country will show that only Zimbabweans are depositing their hard earned cash. You will not see a Chinese, Asian, Indian or our East and Western brothers in the bank queues. Their visit to the banks is when they seek to transfer their gains to their countries and our banks act mercenaries by facilitating such transfers for commissions.

• Robert Zhuwao is the National President of the National Business Council of Zimbabwe (NBCZ), a registered NGO lobby group, think-tank, demand based training, capacity building institute for indigenous business development. Email. [email protected]