Zim not overbanked: Guvamatanga

THE Bankers’ Association of Zimbabwe (BAZ) recently re-elected George Guvamatanga (GG), the Barclays Bank (Zimbabwe) managing director, as its president. Business Reporter, Paul Nyakazeya (PN), spoke to Guvamatanga about issues affecting the sector, among them the controversial indigenisation programme targeting foreign-owned banks.guvamatanga1PN: What were the major highlights in the banking sector during your first term as BAZ president?
GG: First of all, I would like to state that in my first term, I continued the dialogue that my predecessor, John Mushayavanhu, had been having with all stakeholders, including our own regulators, the central bank and Ministry of Finance on how BAZ can best service the various sectors of the economy. I would say that our biggest achievement in my first term was to create a platform in which BAZ will be more visible, and more interactive with the public. The creation of two new positions of senior economist and advocacy officer will enable BAZ to engage and dialogue with all stakeholders on issues of mutual interest, especially on financial literacy, operations of the banking industry and how to teach children to save.
PN: What reforms can we expect in the banking sector during your second tenure as BAZ president?
GG: As BAZ, we believe that the industry should self-regulate and adhere to high ethical standards. We will be playing a very proactive and interactive role with all stakeholders so that our services are well understood. We would also like to engage, through various channels, all those who are unbanked and ensure that we provide the necessary platform for them to be serviced.
PN: What is the BAZ position regarding bank charges in Zimbabwe? There were suggestions that they would be reviewed last year in July but it seems nothing has transpired?
GG: Our bank charges in Zimbabwe are generally comparable to those levied in the region. We should however, note that we operate in different environments with different challenges. Our tight liquidity conditions, and generally lower business volumes, are pitted against significantly higher costs of utilities such as communication and electricity costs.
However, I am confident that going into the future, the banking public will enjoy better service at competitive costs as our economy improves and volumes of business increase.
PN: How do you think the current liquidity crisis can be solved or addressed?
GG: Firstly, we need to restore confidence in the banking system so that potential savers can increase the use of banking services. Since dollarisation, it is our belief that some of the potential savers have chosen to keep their funds outside the banking system. Lines of credit have also been very limited and inflows of new money from FDI (foreign direct investment) and other sources have been virtually non-existent. BAZ will engage the appropriate stakeholders so that we can work towards creating an environment where both savers and investors have confidence in the economy as was the case in the past.
PN: What were the total bank deposits as at June 30, 2013?
GG: The latest RBZ Monthly Bulletin shows that total banking sector deposits surged to US$4,02 billion during the month of May 2013 reflecting a 1,26 percent month on month increase from the US$3,97 billion recorded in April 2013 and roughly 12,23 percent growth on the US$3 580 billion as at May 2012.
PN: What do you attribute the rise to?
GG: The rise is directly associated with the confidence in the banking system and the performance of the economy.
PN: Is there a law that provides for expropriation of banking assets in Zimbabwe?
GG: The laws of the country are very clear and even in cases of dispute, there are procedures to be followed via the law courts. This also applies to cases where individuals have acquired funds via criminal activities including money laundering.
PN: The Reserve Bank of Zimbabwe Governor, Gideon Gono is on record saying he would seek guidance from President Mugabe on government threats to indigenise foreign-owned banks. Has the President’s position been communicated to you?
GG: The BAZ position on indigenisation has always been very clear in that we believe that the sector is sufficiently indigenised. Naturally as an Association, we respect and adhere to the laws of the country.
PN: What is your comment on Indigenisation and Economic Empowerment regulations on the financial sector and its effects?
GG: I think our principals have been engaging on this matter and our views as an Association representing all banks has been fully articulated.
PN: Have foreign-owned banks submitted their indigenisation proposals?
GG: I believe this question should really be directed to our regulators.
PN: The Deposit Protection Corporation (DPC) said it needs fresh capital to increase security of depositors when a bank is placed under curatorship. What is your view on that?
GG: As banks we agree with the concept of deposit protection and the need for the Deposit Protection Corporation to be well-capitalised in order to play its role.
PN: Would you say banks are financially sound, and those you think are not sound what do you suggest should be done to ensure they operate viably?
GG: Both the Minister of Finance and our regulator, the Reserve Bank of Zimbabwe, have been consistent in reiterating the soundness of our banking sector. As bankers, we are confident that the banking system remains sound, despite the challenges it has continued to face. 
PN: How has the absence of a lender of last resort affected bank operations and do you see this function being restored?
GG: At the heart of a healthy financial system in any country, is a well-capitalised central bank that plays the role of lender of last resort and a catalytic role in activating the interbank market. At the advent of the multicurrency regime, the Central Bank, like all institutions, has not been able to play that role sufficiently due to capital constraints.
PN: Some say Zimbabwe is over banked. What is your comment on that?
GG: We do not subscribe to the notion that the sector is overbanked. As BAZ we believe that there is a wide market for our services and that there are still a number of sectors and individuals who still require services of banks. The more banks there are, the better the choice is for all those who require services from banks.  The recent Finscope survey shows that a significant number of the adult population is still excluded from the financial sector.
PN: How do you see the future of banking in Zimbabwe?
GG: The future of the banking sector is exciting. Our members have embraced technological platforms resulting in the significant increase of digital channels in an effort to enhance the experience of customers. There is great potential for the sector to continue producing innovative products to satisfy the growing economy of Zimbabwe. The Association has also identified the need to review its ‘Code of Conduct’ so that it is in line with other best practice codes and is customer centric. We are therefore working with the regulators towards the creation of a banking ombudsman to ensure that service commitments across the banking sector are met in an effort to treat customers fairly. This however will initially require over-view from BAZ as much as we would want to self regulate. With these various elements, the banking sector is set for a bright future.
PN: Foreign owned banks are accused of not adequately supporting local industries with funding. What is your comment on that?
GG: Different institutions have different strategies when it comes to lending or attracting deposits. Some banks will therefore have appetite of lending to manufacturers, while others prefer servicing sectors such as mining, agriculture or tourism. This is reflective of the diversity of banking institutions within the Association.
PN: Do you think the majority of Zimbabweans know how banks operate? What is BAZ doing in this regard to ensure that the ordinary man understands the functions of a bank?
GG: We believe that there is scope for the Bankers Association of Zimbabwe to widen the scope of understanding on how banks operate. BAZ recognises the importance of an educational campaign that increases the understanding of banking services across the country. The increase of informative channels will create a more informed and financially empowered public. Transparency and integrity remain important aspects in gaining that confidence. It is for this reason that we have invested in the recruitment of an Advocacy Officer who will roll out a nationwide programme which we believe will educate all Zimbabweans about the operations of the banking sector including the services that banks provide.
PN: In terms of market share by deposits which are the top five commercial banks and would you give a breakdown of their percentage?
GG: I believe it is fair that this question be directed to the Central Bank as they keep up to date records on returns by banks.

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