Zimbabwe’s banking sector has been exempted from complying with indigenisation and empowerment regulations compelling foreign owned firms to sell controlling stakes to locals despite earlier warnings of interference ahead of general elections, Finance minister Tendai Biti has told a local newspaper.
In an interview with NewsDay on Tuesday, Biti said the banking sector would be safe in the run up to the elections after he teamed up with Reserve Bank of Zimbabwe governor Gideon Gono to shield the fragile sector from the regulations as Zanu PF intensified its takeover.
Under the indigenisation and empowerment laws, foreign-owned companies operating in the country should dispose 51% stakes to locals. Already, major mining and manufacturing firms such as British American Tobacco have partially complied with the law.
“When we started working together (with Gono), at first it was tentative, but we realised the benefits of working together. We have stood together on the issue of indigenisation,” Biti said.
“There can be no indigenisation of banks because it’s ahistorical and stupid. We have managed to wade off any indigenisation of banks. We didn’t do any megaphone fights, we fought quietly. This can’t happen, it doesn’t make sense. So I think that is one of the pluses of the inclusive government. The banks are safe, hear it from me—one of the things in the law anyway is that any sectorial plan has to be agreed with the line minister. I haven’t agreed with the Minister of Indigenisation (Saviour Kasukuwere) on anything.”
Biti’s utterances came after the Economist Intelligence Unit (EIU), a research unit which has offices in London, New York and Hong Kong last month warned that the banking sector could likely be affected by political expediency ahead of the next watershed elections which will mark an end to the inclusive government.
Kasukuwere has been on a collision course with Biti, accusing foreign banks of starving agriculture and small and medium enterprises of funding.
Targeted banks include Standard Chartered, Barclays, Ecobank, Stanbic and MBCA, a unit of South Africa’s Nedbank.
“Political risk is set to rise in the run-up to elections. In previous polls, Zanu PF has maintained its position through a combination of intimidation and electoral manipulation, and there is little sign that its strategy will be substantially different in the next elections,” EIU said.
“State interference in the financial sector continues with ministers demanding that foreign banks cede 51% of their shares to black Zimbabweans by mid-2013. However, a number of foreign-owned banks are looking to expand operations.”
Turning to the setting up of a credit bureau, Biti said the central bank was currently holding discussions as local banks sought to ascertain the credit worthiness of individuals and companies amid a high level of non-performing loans.