Zimbabwe could lose access to global payments platforms

Published: 10 June 2013

Central bank governor believes country could lose access to global payments platforms and external lines of credit if the indigenisation of foreign-owned banks is forced through.

Gideon Gono, the Reserve Bank of Zimbabwe governor, this week delivered a broadside against efforts to force foreign-owned banks to sell majority ownership to local people, highlighting the economic costs of alienating foreign capital.

Gono argued that, as the central bank's governor, he had a duty to "raise the flag of caution" against the "rusted, unstructured and one-size-fits-all approach" to the implementation of Zimbabwe's Indigenisation Act.

He observed that a "significant number" of the foreign-owned banks "may not accept" having their brands associated with a business they have no managerial or shareholder control over, and subsequently remove their capital from the institutions or, at the very least, remove their logos.

"If we are to take, for instance, the signage of an international bank without saying anything to the market, and put it on to a building of a struggling indigenous bank today, without question, that indigenous bank will swell with deposits," he said.

"The opposite will be the case if, for instance we take down the signage of Museyamwa or Chikonamombe struggling [local] banks and put it on the building of an international bank."

Moreover, Gono said, the lines of credit into Zimbabwe would shrink, as international banks operating in the country would redirect their resources elsewhere.

He also warned that Zimbabwe could suffer "financial isolation" were it to disconnect from global payment platforms, and gave the example of Swift - the "gateway" for all the country's payments. "Once the country is off Swift, even the local payment system... will collapse with serious consequences for the economy," he said.

Gono sought to differentiate between the "legitimate battle for and subsequent acquisition and indigenisation of our land" and any attempt to indigenise capital, technology or entrepreneurship.

"These factors have legs to come and go where conditions are more favourable from one location to another, hence the need to treat them with caution and not as if we are dealing with land, minerals and other natural resources which deplete over time," he said.
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