Blacklist errant bankers

As an ordinary depositor, I find it difficult to understand why those charged with looking after other people's money are failing to do so.

Surely, if something is entrusted to you, it does not mean that you own it. It has been given to you for safekeeping not to use recklessly if all at all you want to use it and provided that the owner will get it back at the end.

What has been happening is that the money the depositors put into the bank does not earn any interest at all but is used to pay salaries of the management of the bank. At the end of the day, the original deposit will be depreciating since the management will be deducting bank charges for keeping our money.

Needless to say, it is acceptable that the depositors pay for their money to be kept safely. What riles the depositors is when they want to withdraw their money they are told that there is no money. What happened to the money?

Oh, it was loaned out but those given our money are failing to pay it back. Who actually borrowed the money? In most cases it would be the directors and management of the bank.

Surely, they know that the money so borrowed must be paid back and the money belongs to the depositors not to the directors and management. Actually, we even pay the directors and management for keeping our money.

This scenario is what is happening with failed banks whether they are run by indigenous people or by foreigners in other countries. Failing banks caused the economic crisis that started in the USA. The management of those banks and directors were loaning money to mortgage companies selling houses. The trouble was that they did not care to vet whether the borrowers were employed or not. In short, whether they could afford to meet their monthly remittances or not.

At the same time the house owners lost their jobs, therefore, could not pay back the money. The banks, on the other hand, had also borrowed money from oil producing countries that were awash with excess cash they did not know what to do with it. The banks could not fulfil the terms they agreed with the lenders. If the banks were allowed to fail, then the whole economic system of the world would have collapsed.

The US government then bailed out the banks by lending them money to keep them afloat and pay back their loans and continue to prop up companies that depended on credit facilities and also meet their obligations to depositors and shareholders.

In Zimbabwe's case, with the use of the multi-currency system, which does not give the country room to print money, there is no bailout money from our monetary authorities.

In fact, our monetary authorities themselves are failing to pay back the money they borrowed from inside and outside the country. It is like a house burning without any water to put out the fire. This is the situation with our banks in Zimbabwe when they fail. No one can come to their rescue. Then what happens to the depositors' funds?

It has been reported that the depositors may get compensated. What will happen to those that mismanaged the banks? Nobody is saying whether they will be prosecuted or forced to pay back what they owed the banks. Another development is that a curator is appointed to take charge of the bank's assets and try to see whether the depositors could get their money back.

Coming on the back of the indigenisation and empowerment policy, many people are wondering whether the crop of managers and directors we have are capable of being entrusted with the implementation of this noble policy.

What is of concern to the public is that the failure of banks seems to be the general outlook of how business is being run in the country whether it is the private sector or the public sector. Surely, politicians are scratching their heads, if they still have any hair at all with all these troubles in the country, about what to do. They have a country to run and yet business people are failing to run their own side of the equation.

Caught in the middle is the civil servant who can only rely on salaries from taxes levied on thriving businesses. If these businesses fail, then every headline in the papers puts another nail into their expectations for a salary increase.

The Minister of Finance is reported to have confirmed that the Budget he presented was just a paper tiger with no substance of revenue collections to meet government expenditure.

What does the depositor do? It is estimated that at least US$3 billion is in the informal sector. The people have no confidence in putting their hard-earned money into any of the banks. They are afraid not to access it or lose it. They spend it on luxuries like buying cars or other household goods in cash. Who can blame them?

What I cannot understand is why the depositors do not own the banks? It has been reported that anyone with US$3 million can start a bank. With ordinary and institutional depositors, the bank can attract up to US$100 to US$200 million. But the problem comes when the owner of the bank borrows even up to US$20 million that he fails to pay back.

What kind of a banking system is this? No wonder why we have failing banks when directors, owners and management help themselves to depositors' funds. Something must be done along the lines like of the Law Society of Zimbabwe where lawyers are struck off the register for abusing trust funds. Such bankers must also be not allowed to ever engage in any financial activities.