Despite recent bank collapses
“Let me speak on this belief that banks are a sacred sector. If you decide to kill your cattle for whatever reason, you can’t say this one will be spared. Kill them all,” Chapfika told a meeting with business leaders recently.
Those critical of bank takeovers should listen to people like him who had “experience in banking”, he said.
But that “experience”, and also that of Empowerment Minister Saviour Kasukuwere, has come bubbling to the surface in an increasingly bitter row over a new drive to force banks to cede control within a year.
Chapfika is head of the National Indigenisation and Economic Empowerment Board, which is in charge of implementing the controversial empowerment laws that are now targeting foreign banks. But his history as a former executive director of one of the first banks to fail in Zimbabwe has returned to haunt him.
Influential borrowers
He was an executive of Unibank, which collapsed over bad loans to state-owned companies and influential borrowers. According to a subsequent report, the bank had caved in because of “gross inefficiency and mismanagement”.
It has also emerged that Kasukuwere was a shareholder in Genesis Bank, which folded last month, rocking the financial sector. Through a string of nominee companies, Kasukuwere owned nearly 14% of the bank, according to documents on shareholder disclosures that Genesis made to the Zimbabwe Reserve Bank.
A recent government notice gave banks one year to sell controlling shares to locals, which once again revealed the fault lines in the government between hardliners and the few moderates urging caution.
Reserve Bank governor Gideon Gono has said that Chapfika and Kasukuwere, because of their record with failed banks, were “not fit and proper” to lead the charge on bank ownership.
Kasukuwere responded by describing Gono’s comments as an “unwarranted personal attack” on him and said Gono lacked “maturity and sober reasoning”.
Playing political games
At the heart of the hardliners’ campaign against the banks is a widely held belief in Zanu-PF that foreign banks are deliberately not lending enough to farmers and black businesses. According to Kasukuwere, the banks were stable only because they did not lend to locals – they were “playing political games” by denying blacks funding, he said.
Zanu-PF blames them for the failure of resettled farmers, many of whom are its supporters, to increase production, and also Finance Minister Tendai Biti, who has backed Gono in the row.
Official figures show that lending to farmers has fallen since land takeovers began in 2000. Before that year, 79% of all lending went to agriculture. According to the latest figures from the African Development Bank, farm loans now account for only 22% of all bank lending.
Banks see a risk in lending to farmers who cannot put up security because they have no title to the land and resettled farmers are routinely evicted to make way for well-connected figures. Also hit by liquidity shortages, banks are restricted from any lending anyway.
But Zanu-PF claims it is a deliberate ploy by the banks, at the bidding of Western governments, to frustrate land reform and party hawks believe that, by taking over the banks, it can force them to lend to farmers.
Realigned
Officials say President Robert Mugabe is unlikely to criticise the takeover, despite some ministers saying the Cabinet had not agreed to it and Gono appealing to Mugabe to step in to stop it. The lack of lending to farmers was a major issue at Zanu-PF’s last congress and Mugabe, with an eye on elections and careful not to upset his restive grassroots support, will most likely side with the hawks.
His spokesperson, George Charamba, said last weekend that the president was likely to support bank takeovers. “He will dismiss this false conflict with the contempt it deserves,” Charamba said.
Psychology Maziwisa, Kasukuwere’s closest adviser, said if banks continued to refuse to lend to farmers they had to be “realigned”.
“The question is, if the same banks could fund the white commercial farmers who utilised our land prior to land reform, why can’t they act similarly with our local farmers?” Maziwisa said this week.
Some of the banks that could be targeted are Barclays, Standard Chartered, MBCA (a subsidiary of Nedbank) and Ecobank. Old Mutual owns Central African Building Society, which was once the largest mortgage lender.