HARARE - Zimbabwe government’s unrelenting efforts to indigenise foreign-owned banks have been received with mixed feelings.

While some analysts feel the move is outrightly wrong, others believe it can be done, but tactfully.

The indigenisation of foreign-owned institutions has become a contentious issue with central bank governor Gideon Gono and Indigenisation minister Saviour Kasukuwere, often clashing on the implementation of the controversial law.

Of late, Kasukuwere has intensified pressure on the banks to comply with the indigenisation law, which requires all foreign-owned companies with a net asset value of at least $500 000 to give up 51 percent shareholding to locals.

Those who think it is possible, say a proper research and due diligence needs to be done first. Erich Bloch, a leading independent economist, said that the indigenisation of foreign-owned banks is feasible.

However, Bloch says the prescribed indigenisation threshold should be lowered to below 50 percent and the banks should be allowed to source their own indigenisation partners.

“It is only realistic if fair and timeous payment is made for those shares disposed of by the foreign shareholders, failure of which the banks will be closed, all capital withdrawn, and consequentially intensified money-market illiquidity, with concomitant major negative impact on the economy,” said Bloch.

Bloch added that a botched banks indigenisation deal also leads to cessation of international lines of credit and increased unemployment. Renowned economist and Bulawayo South legislator Eddie Cross said the indigenisation exercise has no substance at all.

It is “just smoke and mirrors” he said.

“This is simply not possible and will not happen. The (indigenisation) threat raises serious issues with regard to investment — both existing and future. Any attempt to force the acquisition of a controlling shareholding in any company would have immediate and disastrous consequences,” said Cross.

“As was the case with the major mining houses they adopted the position that local Zimbabweans could have 51 percent any time they wanted, but they had to pay for it and then follow their money in any future investment,” said Cross. He added that indigenisation of the foreign-owned institutions would exacerbate liquidity problems and the lack of faith in our banking system.

Takunda Mugaga, also an independent economist, argues that it is not feasible to indigenise the foreign banks and at the same time maintain their international names.

“This can only spur such banks to pull out of the Zimbabwean market. China itself is introducing policies to attract foreign direct investment while Zimbabwe is chasing away such investors, so where is our investment model borrowed from?” he questioned.

In his 2013 monetary policy statement, Gono said while banks should observe the laws of the country including the Indigenisation Act, “the process… should, however, take cognisance of the sensitiveness around the operation of the banks to restore confidence, trust and stability in the sector.”

“One size fits all does not work,” said the central bank boss adding that they were working together with the Indigenisation ministry “to ensure that compliance with appropriate laws is done in an orderly manner.”

This development is in apparent response to Kasukuwere’s vitriolic attack last week on foreign-owned Standard Chartered Bank, MBCA, Barclays Bank and Stanbic saying their behaviours were “appalling and, if they want to pack and go, they can do that because they are not of benefit to us.” - Kudzai Chawafambira