Revive depositor confidence

HARARE - The collapse and closure of banks established after independence reflect a miserable episode in renegade corporate governance among local entrepreneurs that has spawned a deepening banking crisis.

Just when confidence was gradually building and a saving culture developing after depositors lost out on life savings during the switch to a multi-currency regime in February 2009, Zimbabweans again have to re-live the agony of doubting the security of their savings.

They are confronted with hard-nosed decisions whether to continue to renew their faith in banks that seem eager to squander public goodwill by their blithe unconcern.

Banks seem to have destroyed whatever saving culture depositors were willing to nurture.

Ordinary depositors now endure justifiable disquiet bred by pesky failure to access their savings when they were beginning to trust these institutions again.

The riots that broke out at emerging banking institutions in Harare and Bulawayo early this week serve as a harbinger of worse things to come, unless the banking sector steps up to the plate and strives to restore that public confidence.

This is a bad omen that destroys any modicum of self-assurance the financial institutions had painstakingly built over these past few years.

No bank can afford to be prodigal with depositor confidence because it represents a vital element that drives their existence.

A healthy banking sector mirrors a robust economy that serves as a guarantee to prospective investors as well.

Those traits have been visibly absent among bankers who deem it proper to abuse public trust and those that see public funds as another opportunity to abuse.

Sound financial husbandry was in some cases the missing ingredient. 

A phenomenal increase in the number of banking institutions in independent Zimbabwe brought forth the notion that local indigenous entrepreneurs had come of age.

But alas, along with the astonishing increase came along equally phenomenal abuse of depositors funds by management.

Even if financial institutions are operating in a tough economic environment that has brought about a debilitating liquidity crunch, this cannot be justification whatsoever for banks to revoke their financial obligations to depositors.

Depositors are not spared the pain of the liquidity crunch.

Zimbabwe boasts a fairly diversified financial service sector comprising 26 banks, 16 asset management companies and 172 micro-finance institutions.

Apparently, banking became a conduit for intrepid individuals and self-anointed financial wizards that had neither sound administrative acumen nor financial judgment of any note to retain public trust and keep confidence afloat.

This week’s depositor reaction casts doubts about the capacity or power of proposals espoused in Zimbabwe’s economic blueprint, ZimAsset to produce a desired effect.

Comments (1)

How do we trust these guys how many times has this happened to us already so how can we How many of these banks have closed, how many of us even got a cent back, how much money have we lost, No way in Hell l'm trusting this Jerks

Ronald Ncube - 18 December 2013

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