Zimbabwes banks have warned the government against forcing foreign owed financial institutions to cede their shareholding to locals saying the move will not benefit ordinary people for at least five years. The Bankers Association of Zimbabwe (BAZ) said the financial institutions were not likely to declare dividends for the next five because of a requirement for commercial and merchant banks to raise their capital thresholds to $100 million. a dividend is a discretionary income The Reserve Bank of Zimbabwe has set a 2020 deadline for banks to meet the new capital requirements. BAZ president George Guvamatanga told parliament recently that government should consider promoting empowerment as opposed to indigenisation. He said ownership without cash flow was unworkable but empowerment would put money into the pockets of Zimbabweans much quicker. If you indigenise, you are giving youth and women shares in banks, which for the next five years might not declare a dividend, Guvamatanga said. Banks cannot declare a dividend until they met the $100 million capital requirement. When you provide a service you get an invoice, which is non-discretionary income, a dividend is a discretionary income. Just ownership without cash flow does not help in any way if for five years there is nothing coming to their pockets, he added. Why would we want our people to have a dividend certificate, which is a discretionary certificate? Zimbabwes indiginisation laws require all foreign-owned companies in to transfer for value at least 51 percent of their shareholding to locals. The banking sector is already dominated by locals with 16 out of the 21 banks owned by Zimbabweans. The on-going economic challenges have forced some struggling local owned banks to sell huge stakes to foreigners.
Posted on: Mon, 17 Mar 2014 21:26:29 +0000
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