Restructure benefits regime: RBZ

Source: Restructure benefits regime: RBZ – NewsDay Zimbabwe May 8, 2017

The Reserve Bank of Zimbabwe (RBZ) has urged banks to change the structure of benefits, which result in the reduction of operational costs that are weighing down financial institutions.

BY MTHANDAZO NYONI

Addressing industry officials at a meeting organised by the Confederation of Zimbabwe Industries recently in Bulawayo, RBZ deputy governor, Kupukile Mlambo said the difference between the deposit and lending rates was quite large due to high operational costs caused by various benefits.

“We are working on a research project right now as RBZ, actually myself and a few guys from the office. We are trying to understand what accounts for the high spreads in Zimbabwe. We are trying to decompose that,” he said.

“What is it that builds up that spread and you won’t be surprised obviously to know that the biggest chunk of that spread is operational costs of banks. When you look into the operational costs of banks and try to decompose them, the large part of that cost is personnel cost.

“So clearly, part of reasons why the charges are high in Zimbabwe is because we need to pay those tellers salaries and bank managers. But when you look at the individual amounts that are being paid to tellers and to other staff, they are not that high.”

Mlambo said what is high was top management costs through cars, the security at their houses, salaries and school fees for children at South African universities.

“So clearly, we need to change the structure of benefits in this country,” he said.

Mlambo said he was surprised when he joined RBZ from the African Development Bank in 2012 to find out that almost half of the staff at the central bank were considered management.

“But that is the group that you buy cars, service their cars, you give them school fees, housing allowance and so forth. In the African Development Bank, the only person who gets a company car is the president of the bank,” he said.

“I was the director for East Africa at that time, which is the third level because you have the president, vice-president and directors. The only thing that you get as a director is a fuel subsidy, not allowance. That’s all you get and everybody else gets a loan to buy a car. You can buy a small (or) a big car depending on how you feel you can service the loan.”

Mlambo said Zimbabwe was facing a challenge of cost of funds compared to other countries in the region, the country is ranked high.

He said the rate of cost of funds in Zimbabwe on average was 11,4% against 6% in Botswana, 4% in Mauritius, 7% in South Africa and 10,5% in Kenya.

 

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    You are now talking. All these ridiculous benefits are an inheritance from the days of segregation when predominantly whites were in management positions. We inherited it unaware that the whites could afford it because they had cheap labor and a performing economy. Even then, there was a lot of rationality and restraint. What we have now is outright greed. It’s only in Zimbabwe where civil servants are paid bonuses. Where did Zimbabwe get this idea that mangers have cars, houses and school fees paid for as allowances on top of huge salaries? In the west, or even right next door to us here, in Botswana, SA or Namibia, buying a car or a house is between you and your bank. Your employer is not even asked to collect any dues from your pay check. I like the new thinking. Do away with overpaid, under performing manages, sell off large under utilized banking halls and offices, invest more in ATM’s and electronic banking and reduce the cost of banking.