Zimbabwe Forces Foreign Banks To Surrender Control To Locals
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Foreign-owned banks in Zimbabwe have been ordered to transfer 51 percent of their shares to black locals within a year, reported the Financial Times this week, though the policy is now facing opposition from some government officials.
Foreign-owned banks in Zimbabwe have been ordered to transfer 51 percent of their shares to black locals within a year, reported the Financial Times this week, though the policy is now facing opposition from some government officials.
On Tuesday, a notice in the Zimbabwean government gazette had issued an ultimatum to banks with a minimum net value of $1 to reduce their foreign shareholding to 49 percent, citing the indigenisation and empowerment quota law passed in 2007 as justification.
However to date, the government’s target had mainly been on mining companies such as Rio Tinto and Impala Platinum, who have been forced to turn over majority stakes in their local units to black Zimbabweans.
According to Reuters, the new focus towards foreign banks is believed to have significant backing by President Robert Mugabe’s Zanu-PF party, particularly Empowerment minister Saviour Kasukuwere.
Kasukuwere had previously vowed to pursue foreign banks, who he accused of refusing to provide loans to the agriculture industry and small black businesses.
[quote]”Foreign banks are safe because they deny you funding … so we have got to transform them,” Kasukuwere was quoted as saying.[/quote]But several prominent Zimbabwean politicians have already come out to speak against the move, including Prime Minister Morgan Tsvangirai and central bank governor Gideon Gono.
[quote]“The people of Zimbabwe want massive investment in the country and not self-serving political statements that have nothing to do with the collective position of government,” said Tsvangirai.[/quote]“We regard the regulations … as devoid of detail and rationality as they are contradictory in many respects with the laws in the country,” added Gideon Gono.
Nevertheless Kasukuwere, is presently seen as a rising star in Mugabe’s ZANU-PF, and could supersede the prime minister’s authority due to the indigenisation and empowerment law.
Mugabe’s “instructions will be final in the manner in which we will proceed”, noted Gono.
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An official at a foreign-owned bank also told FT that while the rhetoric on banks was increasing, it would be hard for the government to attempt to force indigenisation on the sector.
[quote]“It’s not like any government could just take over a bank – the bank would just shut down, but they (the government) don’t want that and we don’t want that, so it’s probably not going to happen,” the official said. “There’s a lack of clarity about what they can do.”[/quote]The banks that may be affected by the move though could be Standard Chartered, Barclays, South Africa’s Standard Bank and Nebank.
