Renaissance should be a lesson to us all

professionals from almost every background gaining interest in the entire unfolding story. It’s quite strange that even my Grade Seven niece had to ask whether this Renaissance was a street waifer holding a plate to receive alms from the passing public.

I was sincerely at pains to explain to her considering her level but the saga continues to ring in her ears.
This is the kind of humiliation the institution has been subjected to of late with the matrix of politics taking centre stage in the panacea to the beleaguered majority shareholder who happens to be Patterson Timba.

We saw it coming some few years ago when he was interrogated by one of the market analyst at an analyst briefing on irregularities concerning the way business matters where handled at Afre Corporation. What Mr Timba could afford to say at that briefing was to portray an emotional face in order to intimidate whoever dared to question his integrity on what he considered his “baby”.

This marked the genesis of the disaster we are witnessing today.
It is time politicians listened to the heartbeat of the market before they attempt to rescue an ailing infant, is that how ailments are diagnosed? As much as Minister Tendai Biti believes he has the prerogative to rescue the tricky client who happens to be Renaissance Bank, this might need the blessings of a combination of stakeholders not only the Treasury. Whether Timba was duped or not into this loan agreement with

Shah might not be of material interest at this juncture.
The market is rather more interested in knowing whether the loan he received was done diligently with the blessings of the board which we, however, question since it looked like a lame duck.
If Patterson truly bypassed the central bank to receive reprieve from the Treasury boss, he has to be truthful to the shareholders that he was defending shareholder interests and not self-aggrandisement.

With around 28 banking institutions with 25 percent of these institutions rumoured to be struggling in meeting capital requirements, systematic risk cannot be warded off or dismissed outright. These are banks which prove that a banking licence might be too high a status for them to retain. This is against a background of recognising the tranche satisfaction of capital requirements were half of the capital requirements was to be met at September end.

Afre might be a tip of the iceberg and the concentration risk it is exposed to through having Jayesh Shah as one of the significant creditors is unacceptable, let alone the interest rate risk which was tragicomic to contemplate notably in this highly illiquid economy.
According to Jayesh Shah, it is argued in Clause 6,2 of their agreement that in the event of default of payment of any amount due in terms of this agreement, then default interest shall accrue at a flat rate of 3,5 percent per month.

What I am not sure of is whether this agreement had the knowledge of Renaissance Bank finance director. Could it be that when expected to be their source of income to pay back the debt turned non-performing, Governor Gono must then update us on the nature of investments at the troubled bank before any discussion on financial rescue is mooted.
There is no way well-meaning Zimbabweans would expect their funds to support dishonesty and profligacy without gaining control of the bank.

Mr Biti has to be frank enough to advise his confidante that the latter can no longer remain a majority shareholder when his digits are not tying up.
If Mr Van Hoogstraten honestly has investments at ZSE worth above 6 percent, then it has to be stated how the indigenisation bill is to be fairly instituted.

Mr Kasukuwere and his team cannot afford to continue spreading wings on their indigenisation campaign without correcting the prevailing status.
An non-Zimbabwean individual cannot boast of such an investment state and be allowed to get away with it, his cake has to be cut if it means the present Government is sincere on its empowerment drive.

It is this loophole which might have trapped Timba into a risky deal without focusing on the costs.
National Social Security Authority cannot be expected to play any role of such make when its constituents is filled with disgruntled pensioners who had been subjected to heartless models of actuarial scientists and insurance practitioners.

Mr Innocent Chagonda and team have to be reminded that investments at NSSA belong to the general public and not the elitist clique which is cropping up to subdue GDP trajectory.
Its only recently when complaints were levelled against its former director Mr Govere for receiving loans from the institution he was serving to be used to find his projects which were not related to NSSA whatsoever.

Policies must also be put in place concerning investment terms and conditions, why are urban loans becoming a common sight with the so called “loan sharks” not channelling any significant sum towards the primary sectors of the economy especially agriculture.

This might have triggered their earned title of loan sharks, they can’t loan to agriculture because they are impatient to see their returns coming at a mild rate.
If these businessmen involved in loaning funds have Zimbabwe at heart, there have to review their target beneficiaries even though it will be hard to dictate for them who is entitled to their private funds.

Having been investors in Zimbabwe even during the harsh times after economic and trade sanctions were imposed upon Zimbabwe does not make them instant messiahs , they had equally benefited from their business deals with the country.

Mr Shah and his compatriots had definitely helped in jeopardising the potential interbank activity through creating their own model of “loan derivatives” which had potential to contribute cash flows supposedly independent of the principal sum. There is no human face to a transaction or deal which attracts more than 3 percent monthly interests in case of default when one is aware that there is that probability of default especially with the state of economic conditions at the moment.

Such lenders have vast business interests outside Zimbabwe which give them a competitive edge over locals since they can borrow money at a cheaper rate to specialise in arbitrage in the dry market of Zimbabwe.
There are a host of reasons why Mr Biti’s approval ratings in the market have been dented following his handling of the Renaissance Bank saga.

Firstly, the presence of Jameson Timba, the brother to the beleaguered businessman in the MDC structures, does not make the Treasury boss the right candidate to handle the case. Secondly, Innocent Chagonda, who is Biti’s friend since their days at the Faculty of Law at the University of Zimbabwe, who is currently at the helm of NSSA which is on the brink of abusing pensioners’ funds. Thirdly, Mr Biti’s disbelief in the RBZ s role inasfar as the banking crisis is concerned, since he never believed in Gideon Gono. Fourthly, how he preposterously suspended Afre at the Zimbabwe Stock Exchange without adequate consultation. And lastly what the public is not yet aware of inas far as the drama is concerned.

For now, I believe it would do justice to let the market fundamentals define Mr Patterson Timba’s fate. There is a possibility of moral hazard and agency problem taking new highs with reckless and blatant disregard of shareholder interests.

The Afre scenario is but a tip of the iceberg. It is high time there was a minimum threshold in terms of shareholding for individual investors especially in the financial services sector.