The Financial Gazette

Bernard Mpofu, Chief Business Reporter

FINANCE Minister Tendai Biti and Youth, Indigenisation and Empowe-rment Minister Saviour Kasukuwere could be headed for a clash after the former vowed to fight against the takeover of foreign-owned banks under the controversial empowerment regulations.

Biti told The Financial Gazette's Companies and Markets in an interview that his ministry would oppose the disposal of 51 percent controlling interest held by foreign-owned banks, a position currently being pushed for by ZANU-PF politicians, including Kasukuwere.
He said the banks should instead dispose of 25 percent shareholding to blacks to ensure that the economy maintains a positive economic growth.
Biti's remarks come barely four months after Kasukuwere announced that the two ministries were engaged in negotiations that seek to come up with a sector specific threshold for the banking sector.
Kasukuwere faced criticisms both within and outside government over a blanket approach on the empowerment exercise with some sayi-ng the policy would scare aw-ay investors.
The Indigen-isation Minister blames foreign-owned banks for not fully supporting the country's economic recovery through conservative lending practices towards agriculture and youth projects.
Last year he threatened to takeover  three banks - Standard Chartered, Barclays and Stanbic - after they missed a deadline to comply with the empowerment regulations set by his ministry. Banks, on the other hand, attribute this lending pattern to limited long-term fi-nancing on the domestic mark-et, lack of collateral from res-ettled farmers and the transitory nature of deposits in the banking system.
Biti however, argued that a higher threshold would dest-abilise the fragile financial services sector.
"The cabinet position is very clear on anything to do with indigenisation. The threshold has to be set by the Minister of Indigenisation in consultation with the line minister. The Minister of Finance and the Minister of Indigenisation have not set the thresholds but we, as the ministry of finance, are going to send a document to the Minister of Indigenisation that says firstly, the banking sector in Zimbabwe is sufficiently indigenised," said Biti.
"We have got 23 banks and only three have to be said to be foreign--- Stanbic, Standard Chartered Bank and Barclays - so it is sufficiently indigenised. However, we recognise the importance of democratising the economy including the banking sector and if it has to happen it can't exceed the 25 percent threshold. Anything else will be killing the economy and we, in the ministry of finance, will not allow the killing of this economy."
A special committee appointed by government two years ago recommended that local shareholding in banks should be restricted to at least 40 percent because the "financial services sector is the most integrated sector in respect of the inter-linkages within an individual  country's economy and the global economy".
The committee, one of the 13          sector-specific committees of the Indi-genisation and Economic Empowerm-ent Board (IEEB), was tasked by Kasukuwere to advise government       on the appropriate net asset value threshold above which business in the sector is required to comply with empowerment regulations, and recommend sector specific indigenisation and economic empowerment strategies for consideration by the IEEB, among others.
The committee's recommendations were rejected by Kasukuwere.
Reserve Bank of Zimbabwe (RBZ) governor, Gideon Gono last year became one of the first high                 profile personalities to back Biti's    position on indigenising the banking sector.
"Tendencies towards firing harmful verbal economic gunpowder must be minimised by all stakeholders in the interest of the economy and the RBZ board forewarns people playing with economic gunpowder to leave the game to those well-trained in its use and safe custody, lest the unintended will happen, to everyone's future regret," Gono said last year.
"This is necessary in order to avoid fly-by-night, reckless and excitable flexing of muscles and decisions that overlook certain fundamentals that could irreparably harm the nerve-centre of our recovering economy."

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