Govt sets out to restructure POSB

By Paul Nyakazeya

The People’s Own Savings Bank (POSB) has taken the first steps towards courting a strategic partner to inject capital and allow the financial institution to fund Zimbabwe’s struggling productive sectors.

Chartered accountants, Grant Thornton Camelsa, have won the tender to implement government’s approved restructuring that will transform the parastatals’ shareholding structure and turn the banking institution into profitability, it has emerged.

Government wants to see improvement in the bank’s capacity to underwrite more business to the productive sectors, according to official documents seen by the Financial Gazette. It would appear government, which wholly-owns POSB, would look offshore for a strategic partner.

Domestic investors are cash-strapped due to a liquidity crunch and have been unable to support local investments desperate for cash.

The official documents said the restructuring of POSB would have to take into account government’s desire to improve “the bank’s capacity to underwrite more business to the productive sectors”.

“This is on the background that fresh capital injection from a strategic partner will enable the bank to once again become one of the key financiers to the productive sectors which (are) currently under-funded,” said the document.

Government also wants the restructuring to include financial inclusion by spreading economic opportunities to ordinary Zimbabweans, targeting informal businesses and the marginalised in remote areas.

It also wants POSB to start making profits and declaring dividends to shareholders, in the process increasing its contribution to corporate tax and other taxes to boost government revenue. Some of the objectives include:

Partnering with international development agencies in further developing POSB’s capacity to widen the frontiers of financial inclusion.

To provide a secure and reliable and savings from the formal and informal markets and avail he resource for productive on-lending.

Access expertise and technology from the strategic partner to improve the banking operations. And to mobilise deposits and savings from the formal and informal markets and avail the resource for productive on-lending.

POSB’s major challenges since the economy was dollarised in 2009 have been liquidity constraints, undercapitalisation and stiff competition.

Camelsa is thought to have the capacity to mobilise lines of credit on a continuous basis and to deliver technology and skills transfers. The firm is networked globally with clear marketing strength and have capacity to maintain the bank’s large branch network.

Four other firms had been shortlisted for financial evaluation before the State Procurement Board settled for Camelsa. The four were Corporate Excellence Financial Advisory Service, KPMG Chartered Accountants Zimbabwe, UTHO Capital P/L and Neverseez & Musa Capital Advisors.

Five bidders’ proposals where returned unopened for failing to meet technical tender requirements in line with tender specifications. The companies were CDF Trust Consulting Zimbabwe, Deloitte & Touche Zimbabwe, Ernst & Young Advisory Service, Thompson Stevenson & Associates and Tonota Capital Partners P/L & Platinum Financial Solutions P/L.

Former state enterprises and parastatals minister Gorden Moyo last year said government approval had been granted for a restructuring of the bank and its listing.

“Three key issues that need to be addressed are firstly that the POSB’s original mandate of serving the grassroots people needs to be retained. There is need for the country to have a bank that specifically caters for the marginalised sectors of the economy, particularly the rural-based population. POSB’s infrastructure and distribution network has that reach. And that needs to be preserved,” Moyo said.

“There was a proposal to introduce a commercial unit within POSB that will very be competitive. This unit will aggressively engage with other big banks in competing in the same space with them. To this end, POSB will need to capacitated through an injection of capital and additional skills,” he said.

“To this end, the agreed position is that government is prepared to relinquish 49 percent shareholding in POSB to such an identified partner,” Moyo said.

The POSB restructuring approval was granted by Cabinet on December 18, 2012. POSB was established through an Act of parliament, POSB Act chapter 24:22 of 1999. The bank is supervised by the Reserve Bank of Zimbabwe in terms of section 45-52 of the banking act. This supervision and investigative role on the POSB was effected through a government notice 101 of 2005.

It remains to be seen if foreign investors would come on board to revive POSB as they have been shunning the country because of perceived unfriendly investment policies. Last year Zimbabwe slipped down two places in the World Bank’s ease of doing business survey, ranking 172 out of 185 economies.

Zimbabwe was also ranked among the 10 countries in the world that lack investor friendly laws despite a huge endowment in mineral and natural resources, according a report by the Canada based Fraser Institute.

The country dropped to position 91 from 74 in the Fraser Institute annual survey of mining companies, 2012-13. The Fraser Institute compiles a yearly report ranking the attractiveness of jurisdictions for mining investments.

Zimbabwe is in the same league with Greece, Indonesia, Vietnama, Venezuela, DRC Congo, Kyrgystan, Bolivia, Guatemala and Phillipines. “Governments have to be more proactive towards investors. Transparency is a must and could be a strong motivator for investors,” the report said. Financial Gazette