Monday, 9 October 2017

CHIPANGA QUESTIONS BARCLAYS DEAL

The Zanu-PF Youth League continues to question the acquisition of Barclays Zimbabwe by a foreign firm, saying this is not in the best economic interests of the country. 

Reiterating the same point he made at the Youth League national assembly in the capital on Saturday, the wing’s secretary Cde Kudzanai Chipanga told The Herald yesterday that the country was doing itself a major disservice by handing over such an asset to a foreign company. He questioned the conspiracy of silence surrounding the deal.

“We are concerned with the Barclays deal, especially on why a foreign company was allowed to acquire the bank,” said Cde Chipanga. “We are really doing a disservice to ourselves. Why is Government silent about this.”

First Merchant Bank of Malawi (FMB) finalised the acquisition of the 105-year-old local bank in June this year after UK-headquartered Barclays Plc announced its divestiture from its African operations, including Zimbabwe. The Malawi Stock Exchange-listed FMB also has interests in Botswana, Mozambique and Zambia. According to Cde Chipanga, it did not make sense for the country to continue to open new local banks, while at the same time selling existing ones to foreign entities. This, he said, was detrimental to the economic sovereignty of the country.

“It is really unfathomable that we are making efforts to open new banks such as Empowerment Bank, while also selling the ones that we have. At least locals should have been given the right of first refusal in the transaction in line with the indigenisation and empowerment regulations. It will not be surprising that after the deal, the new investors will come with a new staff complement and adopt an operational framework that might not be friendly to locals. We are not saying we have to grab the bank, but at least the deal should be compliant with the Indigenisation and Economic Empowerment Act,” he said.

“And why is the Reserve Bank of Zimbabwe, the Ministry of Finance and Economic Development, including the Ministry of Youths, Indigenisation and Economic Empowerment silent about this issue. Well, are we saying that it is now water under the bridge?”

On June 12 this year, RBZ Governor Dr John Mangudya told a parliamentary portfolio committee that the deal was compliant with local empowerment regulations, as Barclays Plc was effectively selling 43 percent of its shares, which is relatively lower than the 49 percent threshold for foreign investors.

It is believed that of the 68 percent that is being disposed of by Barclays, 32 percent will remain listed on the Zimbabwe Stock Exchange, while 15 percent is earmarked for employees and management. Barclays Plc will retain 10 percent of the business for the next three years to ostensibly ensure business continuity. Challenges to the disposal of Barclays Zimbabwe have been playing out in the courts, with the bank’s workers, including senior management, seeking to block the deal.

Senior executives are seeking a management buyout of the bank. Since establishing operations in Zimbabwe in 1912, Barclays Zimbabwe has since grown its footprint to include 38 branches with more than 1 000 workers. Barclays Plc’s Zimbabwe and Egyptian units were not included in the 2013 transaction that saw eight other operations in Africa — housed under Barclays Africa — being sold off. herald

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