18 February 2014

Zimbabwe: Obert Mpofu's Allied Bank Faces Collapse

The troubled Allied Bank is reportedly on the verge of collapse with its owner, ZANU PF Transport Minister Obert Mpofu, said to be failing to inject more cash to keep it afloat.

The bank is one of seven institutions facing insolvency and that have been under central bank surveillance since November last year.

In December there were near-riots at several branches as angry depositors protested the unavailability of cash at the indigenously-owned banks.

Another bank AFRASIA Zim, (formerly Kingdom) which has been facing problems, is said to be limiting cash withdrawals to $300 per day in a bid to manage the persistent cash shortages.

A Herald newspaper report this week said Allied bank will be inviting investors to inject fresh capital in exchange for shares and if that fails, "the bank will downgrade its banking license to deposit-taking micro finance."

Ex-central bank governor Gideon Gono handed Mpofu the bank after he reportedly injected $23 million into the ailing institution, formerly known as the Zimbabwe Allied Banking Group.

Despite his vast riches as a ZANU PF functionary Mpofu has failed to put more money into the bank, amid reports that his takeover deal was not based on cash but rather on assets such as buildings, which the minister has failed to transfer to the bank.

A combination of a shrinking economy, a lack of investment, and ZANU PF's destructive economic policies is likely to see most of the locally-owned banks shutting down for lack of any cash injection.

Following ZANU PF's disputed July 31st poll win, the sector lost nearly a $1 billion almost overnight, as jittery depositors took their money elsewhere due to political uncertainty and concerns about the new government's policies.

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