* As government pushes for local control, floundering black businesses seek foreign help
By Nelson Banya, HARARE, March 3 (The Source) – Nigel Chanakira, fresh-faced and with wide eyes magnified by thick-lensed spectacles, charmed his way into Zimbabwe’s living rooms and the country’s collective financial consciousness in the nineties with a hugely popular television programme, ‘Making money make sense,’ sponsored by his Kingdom outfit.
This, in part, explains why last week’s closure of AfrAsia Bank Zimbabwe, as Kingdom Bank had become known, felt like a personal loss to many, even those who did not have any direct, practical ties to the bank.
The Kingdom inspiration
Kingdom, media savvy and innovative – they pioneered the same-day ATM card – was a breath of fresh air on Zimbabwe’s hugely stodgy banking scene. It was an aspirational brand, Zimbabwe’s banking equivalent of Google.
The personable Chanakira – a CEO who did not think it was beneath him to have a kickabout with clerks and backroom staff at inter-bank games — represented an emerging crop of intrepid black entrepreneurs who were making in-roads into Zimbabwe’s foreign-dominated banking industry in the country’s second decade of independence.
Under the Bretton-Woods inspired economic reforms, President Robert Mugabe’s government was opening the economy up and the financial services sector became one of the most rapidly liberalized.
Before Chanakira, the genteel duo of Julius Makoni and James Mushore had, in October 1992, been granted a licence to set up the National Merchant Bank, now just NMB Bank.
Kingdom, which started off trading securities, made its banking debut as a discount house in 1995, around the same time swashbuckling indigenization crusader Roger Boka was setting up his United Merchant Bank (UMB) with the lofty mission of “breaking the stranglehold of white capital on the economy.” Boka announced his entry into the nation’s economic consciousness through ostentatious, racially inflammatory full-page adverts denouncing ‘white economic hegemony.’ Some of Boka’s more outlandish adverts carried ingots of gold drawn from his mines – if proof of his wealth was needed.
Boka’s UMB was to collapse spectacularly in 1998, but not before causing systemic, seismic waves throughout the sector, thanks to loads of dodgy CSC debt paper. The bank’s collapse also triggered a political scandal – many of the bank’s delinquent debtors roamed the corridors of power – and left a stubborn stain on the reputation of black-owned banks.
A financial graveyard
The late nineties, leading into the new century, saw an explosion of black-owned banks coming onto the scene – albeit with a high failure rate. David Chapfika’s Universal Merchant Bank, Samson Ruturi’s First National Building Society, Takura Tande’s Time Bank, William Nyemba’s Trust Bank, the finance wonk Mthuli Ncube’s Barbican, Jefta Mugweni’s Century, Jeff Mzwimbi’s Royal, Patterson Timba’s Renaissance and Farai Rwodzi’s Interfin –the list is by no means exhaustive – have all been consigned to the ‘banks section’ of Zimbabwe’s corporate graveyard.
It has not all been gloomy. Some black-created banks, such as NMB and Metropolitan Bank, founded by Enoch Kamushinda in 1999, still subsist, albeit with much-changed shareholding structures.
Former Morgan Stanley chairman and CEO Jonathan Chenevix-Trench’s African Century emerged as NMB’s anchor shareholder in 2010, holding a 25 percent stake.
In 2007, Mauritius-registered, Africa-focused investment fund Loita Capital took up a 60 percent share in Metropolitan, which has been renamed MetBank.
ABC Holdings, which was stitched together and ably led for many years by Oliver Chidawu, Douglas Munatsi and Francis Dzanya, is perhaps the prime example of a successful black-run enterprise.
Born out of a merger chiefly involving Anglo American Corporation’s First Merchant Bank, Chidawu’s Heritage Investment Bank as well as the Bard group and UDC, ABC Holdings, whose operations now trade as BancABC, has grown into a veritable African multinational institution under Munatsi’s stewardship. Chidawu, who bowed out of the group in 2012, must be credited for helping provide leadership.
Foreclosures have become commonplace in Zimbabwe, as the economy stalls after double-digit growth registered between 2010-2012 spurred aggressive, some may say reckless, lending. Auction lists published in the national press, which grow longer by the day, are largely met with indifference, Zimbabwe’s national mood, but the nation sat up when Chidawu’s 10 hectare property in affluent Glen Lorne appeared on the list. It was an iconoclastic moment.
However, for Chidawu, who became Harare’s first black mayor at 30 years old and founded an enduring construction business, KuChi, BancABC has cemented his entrepreneurial acumen.
That former Barclays Plc CE Bob Diamond and Ugandan billionaire Ashish Thakar scoured the continent for a banking investment matching their own enormous ambitions and chose to invest close to $300 million in ABC is nothing short of a massive endorsement of how the business has been run.
Sinners and saints
There have been several other black-owned non-banking businesses, many of which had a spectacular run before being placed under administration or collapsing outright.
Trans Zambezi Industries (Edwin Moyo), Apex Corporation (Farai Rwodzi & Co), Tedco (Simba Mangwende), Lobel’s (Livingstone Gwata, Herbert Nkala & Co) and CAPS Holdings (Fred Mtandah), are some of the big businesses which have, at various times, come under untrammeled black control, largely with disappointing results.
These were dominant names in key economic sectors – straddling agriculture, transport and logistics, manufacturing, furniture, pharmaceuticals, insurance, food processing and hospitality.
TZI is a distant memory and Apex has long plunged to its nadir. Tedco – which carried brands such as Zimbabwe Furnishers, Bloom and House of Kumali mutated, with its successor TN Holdings/Lifestyle Holdings barely surviving while CAPS has all but collapsed.
Lobel’s was only restored to Zimbabwean breakfast tables through the efforts of a consortium of banks that rehabilitated it so they could claim what they were owed.
Some black-driven brands have avoided the curse, having found succor in foreign capital. Shingi Munyeza and Shingi Mutasa of hospitalityl group African Sun and conglomerate TA Holdings, respectively, are some examples of local business leaders who have played a smart game with international capital and won.
In 2010 Mutasa listed his Masawara in London, drawing renowned fund manager Neil Woodford of Invesco Perpetual to invest $25 million for a 30 percent stake. Mutasa’s FMI Holdings retains 51 percent control of Masawara, which, in turn wholly owns the recently de-listed TA Holdings.
Munyeza has similarly partnered with Brainworks Capital, which has a significant black Zimbabwean influence and a Frankfurt-based major shareholder, African Development Corporation (ADC). Brainworks is on course to take full control of African Sun, with Munyeza getting some cash and Brainworks stock in exchange.
The indigenisation paradox
All this is instructive – right under the shadow of the indigenisation policy which seeks to curtail foreign ownership, black-owned businesses are stampeding for foreign cash to stay afloat. Those that cannot — or won’t attract foreign cash — perish.
A similar trend has also played out in the petroleum retail and storage sector. Dutch multinational commodities trader Trafigura, through its Puma Energy, now controls both Redan and Sakunda, both Zimbabwean-founded fuel retailers which have dominated the industry after its liberalization in 2003.
A clear pattern emerges, while Zimbabwe’s government persists in its single-minded quest to turn economic orthodoxy on its head – thumbing its nose to foreign capital – the country’s imperiled business class is increasingly seeking out foreign investors to remain afloat.
Zimbabwe passed the Indigenisation and Economic Empowerment Act in March 2008. Six years on, no major business has been indigenised – preliminary deals reached with mining firms Zimplats, Amplats and Aquarius in 2012 are yet to be consummated. Yet the law looms very large over the economy, its various ‘clarifications and amendments’ notwithstanding.
It is perhaps the greatest irony in the whole localisation drive, that while ostensibly seeking to create an enduring indigenous entrepreneurial class, Zimbabwe has actually seen the little vestiges of that class it had created without rattling the indigenisation sabre being decimated.