The indigenisation minister, Saviour Kasukuwere, has given foreign-owned banks one year to surrender majority ownership to black Zimbabweans.
Under the country's 2007 indigenisation law, foreign-owned firms must divest 51% of the shares in their Zimbabwe operations within an unclear time frame. No sizeable foreign firm has yet done so, although a number have announced empowerment schemes of varying kinds that could-eventually-lead to majority local ownership, while others have said that they will divest and leave Zimbabwe.
Mr Kasukuwere's latest directive targets the following institutions: Barclays Bank Zimbabwe, which is majority-owned by Barclays UK; Standard Chartered (UK) and Stanbic (South Africa), both of which are wholly foreign-owned; the Merchant Bank of Central Africa, in which South Africa's Nedbank has a majority stake; and CABS, which is controlled by another South African operation, Old Mutual. The initiative has been rejected by the finance minister and the governor of the Reserve Bank of Zimbabwe, who has put forward his own more moderate plan for increased black ownership. Both are concerned about the health of the fragile banking sector: just 15 of 26 banks made a profit in the first quarter of 2012, and in June one bank was closed by the authorities and a second placed under custodianship.
It is unclear how the indigenisation minister intends to implement his proposal. The South African-owned banks would appear to be protected by the bilateral investment treaty between South Africa and Zimbabwe, which means that the government will have to pay market rates for any shareholding. Since the administration is already looking at a hefty budget deficit-and must also pay upwards of US$500m if it wants to take a stake in the mining operation controlled by South Africa's Implats-it does not have the money to pay for bank shares.
Mr Kasukuwere's comments could damage confidence in the sector and drive away investors, deposits and customers. They could also prompt some foreign banks to divest, since their Zimbabwean operations are insufficiently profitable to outweigh the "hassle factor".
Impact on the forecast
The banking directive reinforces our forecast that economic policy will continue to be driven by political considerations, particularly in the run-up to elections (due to be held in mid-2013).