via EDITORIAL COMMENT: Time to restore trust in banking sector | The Herald December 18, 2013
THE country has once more been witness to another banking crisis common with this time of the year. Queues at selected banks have resurfaced and on Monday we saw the ugly side of this at Allied Bank where a depositor, who by right deserved to get his money when he needed it, ran amok triggering an ugly scene.
The biggest question to ask is why, when the sector knows this has been the same story line since dollarisation, is this being allowed to happen. Has the Reserve Bank of Zimbabwe not learnt anything through overseeing each year of crisis?
The central bank as the custodian and supervisor of banking institutions should be at the forefront in protecting depositors who usually are in the dark over what would be happening behind the scenes.
At the moment, depositors are not informed about the liquidity position of their banks. All they know is that Christmas is around the corner and as such they need their money.
Surely the new Basel II requirements (which they are reminded to adhere to as regulators) now look to pre-empting such situations.
A lot of pertinent questions are now being overlooked?
The “depositors” are our parents, relations, brothers and sisters, that have mouths to feed, rent to pay, school feels, medical costs, electricity etc . . . This is now a crisis yet as per usual . . . no sense of urgency on the part of the authorities.
The truth is the banking sector is not being honest about its current state even though it’s very clear that they may be sitting on a time bomb. Bankers need to tell the country the truth about the real causes of the liquidity crunch in their sector and the level of non-performing loans.
Exacerbation of this crisis will certainly further dent public confidence in the operations of banks. And this could be the reason why an estimated US$4 billion is thought to be circulating outside the banking sector.
Banking is all about trust. People will always remember especially when it comes to where they keep their money.
Bankers need to be reminded that deposit growth is a function of economic growth and confidence in the banking system.
Without confidence, it will be impossible to achieve the “twin challenges of engineering a recovery and reforming the financial system.
Although the economy is poised for positive growth under the Zimbabwe Agenda for Sustainable Socio-Economic Transformation (Zim Asset), the following factors militate against confidence in the banking sector; capitalisation pressures in the banking sector which have seen a significant change in ownership for some banking institutions; the large asset-liability mismatch and non-performing loans since 2009 and an inefficient RTGS payment system, which has resulted in the loss of depositor confidence.
We believe it may take time for the banks to restore lost confidence.
The other factor is that the deterioration in banking asset quality as reflected by the level of non-performing loans and poor disclosures.
But going forward what is clear is this; trust has been lost and the digital world is here and this is where Econet has overtaken banks. The telecoms company through its overlay services is constantly taking up the banking space. Would anyone blame them if they record runaway successes with such services which have proved to be safe for depositors?
COMMENTS
So by forcing the few banks that are operating properly to sign over 51% of their assets to the very people that are operating these fly by night banks that are unable to reply their depositors is creating confidence? Beware all Zimbabweans get your money out of Zimbabwe, they are going to brink back the Zimbabwe $ soon. Don’t trust them and their statements that it is not going to happen. Your money is safest overseas or even under your bed, not anywhere this government can get at it.
Most of Zim banks are headed by people who lack sound corporate governance and skills. Besides these people are confronted by many challenges. Zim also did not invest in information communication technology. In South Africa a very big % of the population does not use hard cash. Most of there transactions are on line or cellphones reducing demand for cash which relieve their banks. there are very few banks catering for a population over 60 million people. zim has many banks and you need to ask yourself whats happening. on the other hand Zim can not avoid cash shortages coz there is no production and exports. a very poor tax system. all things are manual there such that the government is not able to collect tax and also redistribute wealth evenly. Its time the leadership should change and you need to hire people in high offices those who have worked abroad who have gained practical experience and have accumulated education from other countries they will be very useful to turn around the economy. The other problem i see Zimboz have is that they brag about their education. they are very wrong because it has proved that Zim education is a fallacy because they cant even manage their own economy. We cant say we are better than the Batswana when they are able to manage their affairs. Believe me or not a clever person is a person who does not starve himself.