No banks should be indigenised - Gono
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He was addressing delegates at the Affirmative Action Group banking sector meeting in Harare last week. "What we are advocating for here is for a supply side approach to indigenisation for the financial services sector," he said.
"The equity approach is not feasible for the banking sector in respect of the AAG's membership, as each individual will end up with negligible equity." Dr Gono outlined the benefits of the supply side approach.
"Assuming a national cake of US$1 billion and 68 percent (US$680 million) is spent on raw materials and inputs and that 75 percent of this is supplied by indigenous players, this translates US$510 million that can be available to indigenous people," he said.
"This yields higher benefits compared to dividends accruing to the indigenous population of US$5,1 million under the equity approach, assuming a 10 percent dividend policy." Dr Gono also warned the AAG against taking a militant approach to indigenisation of the banking sector, but urged them to continue with the engagement process.
"Do not come near my banks," said the governor.
He said his stance on indigenisation was outlined in the October 2007 Monetary Policy Statement, which entails the empowerment of the majority of Zimbabweans through the introduction of enabling statutes that expand wider involvement of the people in the mainstream economy.
Dr Gono has been propagating a Supply and Distribution Indigenisation and Empowerment (SaDIE) model, which is premised on the participation of a broad spectrum of the population through the supply and distribution chain across the range of sectors.
Under the SaDIE model, indigenous Zimbabweans could benefit from contracts to supply inputs and services to the range of the country's economic sectors. But the equity model, which is backed by the indigenisation law, requires that all foreign companies operating in the country sell at least 51 percent of their equity to indigenous parties.
To this extent, it may also apply to sectors beyond the financial services sector.
Dr Gono added that under the supply-side model, the thresholds of the indigenisation could be pushed upwards. "In terms of SaDIE, we can actually begin to require that, of all inputs that companies use, at least 80 percent should be supplied by indigenous people.
"I am not saying that the equity approach is not right, but what we are seeking to do here is to complement it," he said. Dr Gono said he had last week held discussions with the Minister of Youth Development, Indigenisation and Empowerment Saviour Kasukuwere over working with the National Indigenisation and Economic Empowerment Board to implement the SaDIE.
AAG president Mr Keith Guzah welcomed the governor's suggestions. "We will give our weight to the governor's proposals, which allow a majority of our people to benefit from the opportunities in the economy," he said.
Bankers' Association of Zimbabwe president Mr George Guvamatanga said he was supportive of initiatives by the AAG to empower locals and the proposals by the RBZ Governor.
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