‘Trust in banks still critical’

Harare Bureau
FORMER World Bank country manager for Zimbabwe Dr Nginya Lenneiye Munga says trust in bankers remains a key ingredient of good banking and confidence in the banking system. Dr Mungai said in the olden days whether one was a farmer or trader; the early banker had to be trusted by those who handed over their grain for the inter-city trading.

He said goldsmiths, the early gold-backed currency traders had to be trusted by the owners of gold in their vaults and those accepting promissory notes against the gold value.

Dr Mungai said banking goes back to the beginning of human civilisation.

In Zimbabwe several banks have collapsed, including during the 2003/4 banking sector crisis, due to issues related to confidence and trust as well as financial impropriety.

“This trust remains a key ingredient of good banking — whether commercial or state central banking.” He said the gold backed currency system failed due to lack of trust.

The former World Bank Zimbabwe chief said this at the graduation ceremony for the Institute of Bankers of Zimbabwe in Harare on Thursday where over 90 students were capped. Dr Mungai was the guest of honour and capped graduands.

Several bank CEOs, including MBCA managing director and Bankers’ Association of Zimbabwe president Dr Charity Jinya graced the occasion.

“The use of the gold standard was abandoned in 1971 when it became clear that the value of US$ in the market was more than the gold held in the vaults of central banks,” he said.

This he said, “was a result of aggressive quantitative easing.

Similarly, it is quite understandable for bankers and others in the business world to be sceptical about the idea of a gold-backed currency in smaller economies when even the US’s $18 trillion economy cannot realistically go down that road.

Dr Mungai said trust was among the five attributes that have stood the test of time since the early days of banking and stressed “Trust is still key in any banking set up.”

He said others attributes key in banking are innovation, skills and empathy.

Bankers have shown innovation, going from financiers of grains and traders in temples to establishing dedicated institutions for financial transactions and central banks.

Dr Mungai said successful bankers have had to show empathy to their customers or clients (that excludes the mythical Shakespearean Shylock character. “When you put trustworthiness, empathy, honesty, and skills together and then point out someone with these qualities, you have integrity — a person who can be trusted, reliable, and honest,” he said.