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Bulawayo pursues Municipal Bank dream

by Staff Reporter
03 Feb 2023 at 06:48hrs | Views
THE Bulawayo City Council has renewed its interest in establishing a Municipal Bank by broadening its scope in harnessing more insights from knowledgeable players towards setting up the finance institution.

The local authority seeks to guard against being used as a guinea pig by involving one entity as the project presents numerous risks on the use and management of public funds.

In 2018, the local authority resolved to engage a consultant to undertake a feasibility study on setting up the bank after the Urban Councils Association of Zimbabwe completed its study.

An unsolicited proposal was then received from Chimutengo Group, together with a draft Memorandum of Understanding (MOU).

The entity had offered to partner the council in setting up the proposed Municipal Bank.

The city's finance director, Mr Kimpton Ndimande, in the finance and development committee report said Chimutengo Group made presentations to the council management and financial services department team.

After the presentation, a council inter-departmental committee was tasked with analysing the proposal.

Following a due diligence process to read and analyse the proposal to set up a Municipal Bank, and the accompanying MOU from the Chimutengo Group (CG), the council inter-departmental committee, invited officials from Chimutengo Group in March last year to clarify several certain grey areas that had arisen.

The council committee sought clarity on the document originality, capacity of CG to implement a project of this magnitude and impractical principles in relation to the Zimbabwean economy ·

The committee raised reservations on the proposal.

"Regarding the originality of the document it was the committee's conclusion that the proposal document did not adequately address the Zimbabwean situation in general and Bulawayo in particular," reads part of the latest council monthly report tabled during a full council meeting on Wednesday.

"In essence it was a theory paper not backed by any practical grounding. The committee noted that the concept of a Municipal Bank was new in Zimbabwe and indeed in most parts of the world and consequently questioned how CG, who have not themselves been involved in similar projects would be able to set it up and properly manage it as per their proposal.

"Furthermore, the committee noted that the MOU was very binding and based on the anomalies raised in the proposal there was a need to invite other players and, thus, afford an opportunity to compare and contrast different proposals."

During ensuing discussions, the Town Clerk, Mr Christopher Dube said there was a need for council to first deal with Chimutengo Group. Once the issue was closed, the local authority would then advertise for Expressions of Interests.

Reads part of the resolution, "It was resolved to recommend that council casts the net wider and consider other interested players in the Bank project, guided by the existing Council resolution".

The bank, which will be a first of its kind in the country and continent, is expected to boost investor confidence and ensure that resources meant for infrastructure development are not diverted for other purposes.

In December last year, the council unveiled a new policy, which seeks to diversify its investment portfolio by investing excess funds in portfolio investments that offer the highest returns at minimum risk.

This is in line with the proposed investment strategy known as ‘City of Bulawayo Investment Policy' that is expected to be effective from this month.

Source - The Chronicle