adminENTERPRENEUR Dr Nigel Chanakira believes that irresponsible individuals and poor macro-economic conditions have blighted Government efforts to create an enabling atmosphere for black businesses to thrive, especially in the financial services sector.
In a wide-ranging interview with The Sunday Mail Business last week, Dr Chanakira said Zimbabwe’s banking sector crisis was a sum total of poor corporate governance practices and successive years of economic decline through 2008.
Dr Chanakira – himself a trailblazing local investor in the banking sector after the liberalisation of the industry in the 1990s – said high non-performing loans, insider loans and failure to meet capital requirements have been a major drawback to the growth of indigenous banks.
Two bouts of banking sector crises that affected the industry during both the Zimbabwe-dollar era and during the subsistence of the multi-currency system, according to Dr Chanakira, where characterised by high non-performing loans, liquidity challenges and general economic slowdown.
It is believed that the 2003/2004 banking sector crisis changed the course and nature of the country’s banking sector post independence.
“Generally, though, my personal views straddling across the two banking crisis are that, one can point to macro-economic factors such as the challenging and volatile economic and political environments, hyperinflation.
“Then of course the impact of dollarisation, municipal debt cancellation by Government, and new capital levels, systemic risk, all which have occurred over the past two decades,” he said.
He added that bankers themselves were also to blame for poor adherence to known risk parameters as they were “found wanting in one, if not many, ways”.
The general economic slowdown that affected the local economy in the decade leading to 2009 did not only affect the financial services sector as it took a toll on other sectors of the economy as well.
But banks, Dr Chanakira said, are a mirror of the country’s economic performance.
“Where economic activity slows, savings will decline, liquidity tightens and borrowers default on loans and advances.
“We have seen some spectacular company collapses and closures taking down with them some banks.”
Indigenous banks mainly took root after the liberalisation of the financial services sector.
But the honeymoon period was not to last as most of them crumbled.
These include United Merchant Bank, Trust Bank, Barbican Bank, Royal Bank, CFX Bank, Time Bank and Kingdom Bank, which was later to be known as AfrAsia Bank Zimbabwe.
However, the businessman opines that this development is not peculiar to Zimbabwe as it is a global phenomenon prompted by new steep capital requirements, banking regulations and restrictions on control and ownership patterns of yesteryear that have caused the downfall of individual and family-owned banks.
Online Reporter