The economic perspective

31 01 2012

It was not an auspicious start.
“What are you looking for?” asked the attendant in the very dim interior of CBZ bank in Borrowdale.
“The withdrawal slips” I replied.
“Here you are” he said, handing me a photocopy of the usual slip.
I wondered if they were photocopied because that was the only way they could keep up with demand or maybe there was a more prosaic reason. I filled it in to draw the estimated $3000 that I needed to buy seed and various other inputs for the remainder of the month and moved to the queue. There were no lights and the TV (yes, Zimbabwe banks have a TV on to entertain those in the queues) kept turning on and off and then gave up. A fan at the other end of the counter put up a valiant attempt and then gave up too. The lights remained off.

“Hello Mr Roberts” the teller greeted me in her usual cheery fashion. I looked over at the blank computer monitor and gave her the withdrawal slip.
“Oh, we are only giving out $1000 per person” she said on seeing the amount. “You will have to speak to the manager if you want more”.

I exchanged the standard “how are you” greetings with the manager and to my surprise she said “Actually I am not happy, the generator has packed up” and proceeded to phone around to get someone to come and help. She also told me that I could only draw $1000 a day. I applied a bit of pressure and made no move to leave her office. She tried another tactic: “By this weekend you will be able to draw as much as you like”. I said yes, but I had to get inputs NOW! She eventually gave up and I handed over the cash withdrawal slip and left her office.

Now the stock market listings may not be everyone’s idea of light entertainment but most people have not seen the ZSE (Zimbabwe Stock Exchange) listings. I turned to the back page of The Herald business section on the bank manager’s desk. I would think most countries list share prices in “whole” currency units but in Zimbabwe we list them in US cents! All of 4 companies were listed as trading shares at over $1 and though some were not trading at all (not sure why) some were trading at a lot less than 1c. Gulliver 0.01c, Celsys 0.04c, Cairns Foods 0.07c. The vast majority showed negative growth with Gulliver – once a top construction company – nearly leading the pack at -63% for this month (that has to take some doing!) and Ariston at the other end of the spectrum up 56% for the month with a share price at around 1.30c.

“I guess this puts the economy in perspective” I said to the manager as she came back into her office with my money. She just shook her head.

CBZ (Commercial Bank of Zimbabwe) stumbles – badly

26 01 2012

Last Friday I was in the bank and got the cash I needed without a problem. I saw the ART Farm accountant there and he was muttering about not being able to do transfers. Over the weekend it emerged that they had a liquidity problem so it was with a bit of concern on Monday that I went to draw wages. They grudgingly gave me the $4000 or so that I needed but most people were only getting $1000 and they only had smaller denomination notes; $20 and less. There was clearly a serious problem here.

In Friday’s Independent newspaper CBZ was reported as loaning $713 million last year, more than double the next bank, BancABC. I have also heard anecdotally of a farmer who got a $1m loan from CBZ – clearly impossible to pay back in Zimbabwe’s economic climate. Then yesterday Shelton told me that he’d seen in the press that the liquidity problem WAS due to too many loans being given out. Just who was in charge of that aspect? Is this a case of “loans for mates” of Gideon Gono who has significant influence there? I wouldn’t be surprised.

Smoke and mirrors at the bank

26 01 2010

I was chatting to a banker on Saturday at work. He’d come to buy a few seedlings for his veggie garden and we struck up a conversation. He is with the agri-banking sector of ZB Bank, formally known as Zimbank. The government has a share in it and it is one of the banks that has been affected by the US and European sanctions so they have been treading a conservative line. He asked how my business was going and I replied that it was very slow; in my opinion there was just not money available for loan at realistic interest. He agreed that rates of 25% or more were stifling lending but that around April ZB was getting a cash injection from an investor. I speculated that it was part of Robert’s “Look East” (to Malaysia) policy. No, the banker replied, this is look south. I assumed he meant South Africa. He just laughed.

I mentioned that I banked with CBZ (Commercial Bank of Zimbabwe). He raised his eyebrows and cautioned me to be careful. Now I’ve had nothing but good service from my branch of CBZ ever since I pulled my corporate account away from Barclays for utterly dismal service some years ago. When pressed he told me that CBZ are in good financial shape because the government is using them as the national bank so if normality ever returns and the Reserve Bank resumes banking to the government as it should, CBZ will not have the reserves that it enjoys today and could collapse. I asked if I could pick that up in the CBZ annual report. He laughed – it seems there are many ways to hide accounts from auditors.

CBZ started out as BCCI (Bank of Credit and Commerce International) which was known locally as Bank of Crooks and Conmen International. It was Pakistani founded with major middle east shareholders and went belly up in spectacular way some years back (check out the Wikipedia reference for some entertaining reading). The government here bought out the local concern and it was mostly owned/run by Gideon Gono who has been in charge of the Reserve Bank for some years though he apparently has a reduced role in CBZ these days. Some years back ABSA, a big South African banking group, bought around 23% of CBZ shares and it was seen as a mark of approval. CBZ have since bought back those shares. While most other Zimbabwe banks are battling the stagnated economy CBZ is apparently blooming. One has to ask how they have done it.

Maybe it’s time to open another corporate account with a bank that makes less use of smoke and mirrors.