opinionBy Eric Bloch
No satisfaction, joy or pleasure is gleaned from differing with the Minister of Youth Development, Indigenisation and Empowerment, Saviour Kasukuwere, especially as none can credibly contend that a substantive economic indigenisation and empowerment programme is irrefutably long overdue and critically necessary for the well-being of Zimbabwe and its people.
It is untenable that Zimbabwe's economy is so relatively miniscule that the majority of its population enjoys very niggardly incomes, grossly insufficient to sustain them, their families and other dependants.
It is as greatly untenable that such economic activity as does exist vests in the hands of very few, whilst most are predominantly economically inactive, and possessing little.
Nevertheless, sometimes it is necessary to differ with the minister, for his very pronounced motivation and dedication to pursue considerable indigenous involvement in the economy and meaningful economic empowerment is all tragically often done in counterproductive and adverse manners which become barriers to achieving the declared objectives.
In reality, the majority of Zimbabwe's indigenisation and empowerment laws have proved to be deterrents to achievement of the declared objectives.
Instead of fuelling economic growth in the beleaguered economy, the laws have been very major causes of continuance of Zimbabwe's ills, and of intensified unemployment, with concomitant intensified poverty for very many.
This was emphatically shown when the minister addressed editors who attended the Zimbabwe National Editors Forum eight days ago. He launched a vitriolic attack on Zimbabwe's foreign-owned banks in general and upon Standard Chartered Bank, Barclays Bank and Stanbic, in particular.
He is reported to have said that the behaviours of foreign-owned banks "are appalling and, if they want to pack and go, they can do that because they are not of benefit to us." He underscored that these banks "are free to leave if they are not prepared to support the agricultural sector and emerging businesses in Zimbabwe" and he alleged that "the money they are holding is ours, as it comes from our pension funds and farming activities."
These statements are cluttered with misrepresentation, suggesting that the minister has been markedly misinformed of the facts and realities.
First of all, he is oblivious of the fact that the majority of the funds held by the banks comprise the capital injections forthcoming from their shareholders and international lines of credit that they were able to source, mainly from their shareholders and from non-Zimbabwean financial institutions.
Only a small proportion of their funding is from Zimbabwean pension funds, insurance companies and like entities, and save for such relatively small extent as those bodies have provided funding to acquire shares in the banks, most of those funds are naught but loans and advances which are subject to repayment.
Admittedly, some bank funding also emanates from private sector depositors, including (to a limited extent) from the agricultural sector, but almost all of these funds are usually withdrawn very soon after having been deposited and, therefore, cannot be excessively used to provide advances, be it to the agricultural sector, to emerging businesses or other enterprises.
Even to the extent that the foreign-owned banks do have funding available for advances to the private sector, they cannot extend that availability to all and sundry, and especially to the Zimbabwean farmers and to emerging businesses.
The world over, it is a fundamental precept of banking that loans and advances need to be secure, in order that the banks do not sustain losses, and thereby become unable to meet the withdrawals by depositors, and timeous repayment of loans advanced to the banks.
However, in Zimbabwe, the majority of those now engaged in agriculture do not have assets which enable them to provide reasonable and realistic collateral security to banks.
They do not have lawful title to their lands, ever since government prescribed in the 1990s that all rural lands vest in the State.
At best, the farmers are only possessed of non-transferable, non-negotiable, 99-year leases, and very limited other assets of collateral value. This is despite the fact that 15 months ago, President Mugabe told Parliament that these leases would be modified to accord them collateral status.
That has not happened. Therefore, even though the banks may have the wherewithal to provide some funding to farmers, they are severely constrained from doing so because of the absence of the collateral. The provision of collateral is a worldwide prerequisite of good governance in banking, in order to protect depositors against a loss.
In like manner, most emerging businesses within the Zimbabwean economy are under-capitalised, under-funded, and devoid of that which is necessary to provide banks with fair and reasonable security to protect any advances made by them to such businesses.
Hence, the inadequacy of bank financing in the agricultural sector and for emerging businesses is not a consequence of any intended discrimination or refusal to recognise the needs of the would-be borrowers.
Nor is it because of any bank's policies to undermine the economy in general or the policies of indigenisation and economic empowerment in particular. That inadequacy is in part because of the insufficiency of available funding, despite the under-lying capitals of the banks and by the short term nature of deposit.
The desultory state of the economy ensures that the deposits are also low. Furthermore, potential depositors, both local and foreign, still harbour fears of the local banking system, that some day they might not be able to access their money when they want to.
Banks are not enemies of Zimbabwe, as implied by the minister, and his accusations against them are unfounded and devoid of substance. Such attacks on the foreign-owned banks are a major contributor to hesitancy and reluctance of their shareholders, and of international financiers, to enhance the provision of further funding to the banks.
That concern-based hesitancy by key-owners of those foreign-owned banks to further fund their Zimbabwean banking enterprises is intensified by the manner in which Zimbabwe is trying to aggressively enforce indigenous majority ownership of the banks.
It is untenable to the foreign shareholders to be confronted by endless, antagonistic, demands that they divest themselves of 51% of their equity holdings, being reduced to minority shareholders with no reasonable and rational control authority over their businesses.
They are not only prejudiced by this, but are also accorded very little, if any, ability to identify any co-shareholders, instead having various national funds (such as the Sovereign Wealth Fund and the Youth Development Fund) and community-related Trusts imposed upon them.
They are not even given assurance that they will be accorded fair value for the shares of which they are divested, or as to when they will receive payment for such shares.
As a result, they are not only unprepared to increase their exposure by providing additional funding to enhance the lending ability of their Zimbabwean operations, but can well reach a stage of complying with the minister's suggestion that they can "pack and go".
If this happens, there will be withdrawal from the Zimbabwean straitened money market of all their funding, which would further weaken the economy.
That in turn will be yet another barrier to achieving greatly needed, effective and constructive, indigenisation and economic empowerment.
The minister needs to ensure that he is given factual, economic and financial information, to ensure that he does not goof again!