via Controversies shroud NSSA investments | The Herald March 4, 2014 by Tinashe Makichi
THE controversies surrounding investments made by the National Social Security Authority have pointed towards some partying going on in the authority.
What is sad is the seemingly wanton investment decisions that the authority is undertaking, risking the pension benefits of the retirees and those still in employment.
As a matter of fact, NSSA has investments directly or indirectly in almost every Zimbabwean bank, itself being testimony to its centrality in solving the domestic investment dearth and consequentially the liquidity crisis affecting the economy. For lack of a better phrase, the investments that have been done by NSSA so far are a reflection of the lack of financial and econometric depth from their investment board.
For instance even when the signs were there to see on the eve of the collapse of Interfin Bank, the authority blindly continued to do money market placements. It was clearly indicative that the potential loss in Interfin Bank alone was over US$19 million. Last year NSSA gave Capital Bank the nod to wind up operations to focus on setting up a micro-finance institution, a move that was greatly opposed by economic analysts.
“Indications are that the NSSA takeover failed to turn around the fortunes of the bank to an extent that functionally the entire staff is redundant or on forced leave pending dismissal,” said one observer.
“And how can a bank such as Capital pay hefty salaries when it has no meaningful trading income and worse still, a negative balance sheet?” another observer noted.
Current debate on whether or not to liquidate Capital Bank puts in front another dramatised NSSA nuisance that has a potential to see a whopping US$30 million go down the sewer.
Baring the RFHL’s indiscretions that saw the NSSA takeover and the board’s continued pursuance of liquidation actually boggles the mind. In as far as NSSA prefers to go it alone, sidelining Mr Peterson Timba and Mr Dunmore Kundishora in the whole bank reconfiguration process actually create more problems for the beleaguered Capital Bank.
In essence, the fortunes of the bank lie with the involvement of the trio Mr Timba, Mr Kundishora and Ms Clementine Sibve.
The initial rescue package that NSSA facilitated would have by now put the bank on a steady footing both directly from an operational competency point as well as from the interconnectedness of the institution with the cash rich First Mutual Life.
Thus the stance taken by RFHL directors to contest the liquidation is noble for it will be height of financial demagoguery to allow a whopping US$30 million that NSSA injected go down the drain.
Economic analyst Mr Joseph Sagwati added that a resuscitation formula which was popularised when NSSA rebranded the bank to Capital Bank was to do with the bloated human resource structure that took big salary packs for doing nothing while at the same time lacking basic tenets of structuring and financial modelling.
Other economic analysts have labelled the chief guys at capital bank minnows in investment management.
Market watchers have remained optimistic on Capital Bank saying all is not lost but there is need for injection of banking acumen.
Economics and finance are disciplines that should not be approached in anger or emotion. As the founding directors of RFHL have alluded to possible funding injection from an investor, it is paramount that they should be given a chance.
In this instance they should roll-over the US$30 million injected by NSSA into either a debenture with a yield maturity time frame of 5-years while reconfiguring the bank on a sound footing.
Further, let the RFHL directors pursue the debts that they have cited to be pending and especially now with the extension of the banks compliancy date moved into the future.
This will create a win-win situation for NSSA and Mr Timba as well as the workers who stand to lose their jobs.
The absence of deal structuring on credit instruments as well as a non-vibrant domestic trade regime on trade finance facilities has negatively affected the viability of merchant banks.
Capital Bank’s annual financial accounts were qualified last year but they could not be published. Analysts say one of the reasons why a bank or any company with fair representation of public interest would not publish results would be a negative balance sheet and residual non-performing loans that would naturally elicit public scrutiny.
NSSA has a controlling 84 percent shareholding in Capital Bank with the remainder being held by Mr Timba, who is the founder of the bank, formerly known as ReNaissance Merchant Bank.
In addition to controversial dealings characterized in most NSSA investments, much can be seen in how they invested capital in ZimAlloys. According to economic analysts such an investment was a clear sign of Mr Farai Rwodzi dumping an entity that was already struggling into the hands of NSSA. Therefore in other words most struggling corporates have taken advantage of NSSA’s investment muscle by dumping their assets yet this comes at the expense of the pensioner’s money.
“For your own information these deals we crafted in the comfort of hotel rooms without proper deal structuring and crafting acumen. People like Farai Rwodzi have used their links to NSSA to dump their malfunctioning assets for instance ZimAlloys which they knew they were no longer viable,” a source who requested anonymity.