‘Digital payments will curb money-laundering’ 

Source: ‘Digital payments will curb money-laundering’ – NewsDay Zimbabwe BY HARRIET CHIKANDIWA GOVERNMENT will embrace use of digital payments to curb money-laundering and to ensure that the country transitions into a paperless economy, a deputy minister said. This was said by Finance deputy minister Clemence Chiduwa in Parliament on Wednesday in response to questions on […]

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Source: ‘Digital payments will curb money-laundering’ – NewsDay Zimbabwe

BY HARRIET CHIKANDIWA
GOVERNMENT will embrace use of digital payments to curb money-laundering and to ensure that the country transitions into a paperless economy, a deputy minister said.

This was said by Finance deputy minister Clemence Chiduwa in Parliament on Wednesday in response to questions on cash shortages.

“Where we are going is the digital economy that is in line with the National Development Strategy 1 and Vision 2030,” Chiduwa said.

“We are moving away from situations where we heavily rely on the usage of cash, and we are embracing digital technologies. Digital technologies are going to be good for us in terms of anti-money-laundering activities. We should be able to monitor who is doing what, and there is always a digital footprint when we move away from the usage of cash.”

The push towards a digital economy gained traction in 2016 when the Reserve Bank of Zimbabwe (RBZ) rolled out the first phase of its financial inclusion strategy.

The strategy has been credited for sustaining the markets during episodes of dire cash shortages.

Official data indicates that over 90% of transactions in Zimbabwe are now conducted on digital platforms.

Last week, RBZ governor John Mangudya presented his monetary policy statement, where he stated that digitisation of financial services would continue to play a pivotal role in driving access and usage of financial services during the COVID-19-induced lockdown.

According to RBZ data, the number of active mobile money subscribers increased from 4,05 million to 4,13 million during the review period.

Central bank governor John Mangudya

“Notwithstanding the COVID-19 pandemic, the national payments system remained safe, sound and stable during 2021,” Mangudya said.

“Digital payment systems transaction values continued on the exponential growth trajectory with a 218% increase from $2,5 trillion recorded in 2020 to $7,8 trillion in 2021. Transaction volumes, on the other hand, were on a declining trend, falling by 24% to 1,4 billion.”

Meanwhile, Chiduwa told Parliament that the Zimbabwe Revenue Authority (Zimra) was struggling to release tax clearance certificates for most companies.

“It is true that Zimra this time of the year, January and February, gets a lot of challenges because many companies will be looking for tax clearances. The main problem is that most companies want to pay all at once, and so our computer system crashes,” he said.

“Zimra has since rectified the system so that people can get their tax clearances on time, but that is a problem that usually occurs in January. So by now, expect that many companies have got their tax clearances.”

Companies have been complaining that Zimra’s delays have seen them being forced to pay withholding tax, which is pegged at 30% of transaction value, significantly affecting their operations.

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Chiwenga’s top aide Mandizvidza dies

Source: Chiwenga’s top aide Mandizvidza dies – NewsDay Zimbabwe BY GARY MTHOMBENI PRINCIPAL director in Vice-President Constantino Chiwenga’s office, Israel Mandizvidza, has died. Mandizvidza succumbed to an undisclosed ailment at West End Hospital in Harare yesterday. Chiwenga confirmed the development in a statement, where he described Mandizvidza as a dedicated, loyal and patriotic officer. “He […]

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Source: Chiwenga’s top aide Mandizvidza dies – NewsDay Zimbabwe

BY GARY MTHOMBENI
PRINCIPAL director in Vice-President Constantino Chiwenga’s office, Israel Mandizvidza, has died.

Mandizvidza succumbed to an undisclosed ailment at West End Hospital in Harare yesterday.

Chiwenga confirmed the development in a statement, where he described Mandizvidza as a dedicated, loyal and patriotic officer.

“He was attested in the Zimbabwe National Army on January 1, 1995 as an Officer Cadet. He rose through the ranks to Lieutenant Colonel. Israel was a versatile officer with an agile mind and disposition,” he said.

Chiwenga said Mandizvidza used his rich military and academic background in discharging his duties.

“He paid meticulous attention to detail, a feat that made his work stand out among his peers and superiors.

“The void he has left will be difficult to fill. On behalf of the office and on my own behalf, I wish to convey my heartfelt condolences to his spouse Lister, children, Tanatswa Ronia and Tavonga Gideon, the Mandizvidza family and the Zimbabwe Defence Forces on this sad loss.”

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Zim to host Shelter Afrique AGM 

Source: Zim to host Shelter Afrique AGM – NewsDay Zimbabwe BY SYDNEY KAWADZA ZIMBABWE’S efforts to reduce its housing backlog, estimated at two million has received a huge boost after pan-African financier Shelter Afrique pledged to assist in accelerating financing of housing projects in the country. In July, the country is set to host Shelter […]

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Source: Zim to host Shelter Afrique AGM – NewsDay Zimbabwe

BY SYDNEY KAWADZA
ZIMBABWE’S efforts to reduce its housing backlog, estimated at two million has received a huge boost after pan-African financier Shelter Afrique pledged to assist in accelerating financing of housing projects in the country.

In July, the country is set to host Shelter Afrique’s 41st annual general meeting (AGM) in Victoria Falls.

In a statement, Shelter Afrique said the AGM would cover a ministerial roundtable.

The host agreement has been signed by Zimbabwe’s National Housing and Social Amenities minister Daniel Garwe and Shelter Afrique group managing director and chief executive officer Andrew Chimphondah.

The event will be held under the theme: Climate Change and the Built Environment.

According to the statement, following the signing of the host deal, government is expected to ensure effective organisation and success of the meetings.

“Shelter Afrique held its 36th AGM in Victoria Falls and its return after five years for the 41st AGM demonstrates renewed interest in Zimbabwe, providing a window of opportunity for the government to leverage on in shaping the narrative towards robust human settlement delivery strategies.

“I would wish to thank Shelter Afrique for bestowing trust upon Zimbabwe as a nation by selecting it as a venue of choice,” Garwe said.

Zimbabwe, through hosting the AGM, would accrue substantial gains which include regional integration, tourism and business linkages.

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ZITF 2022 preps begin 

Source: ZITF 2022 preps begin – NewsDay Zimbabwe Stella-Nkomo-ZITF-DCEO BY SILISIWE MABALEKA PREPARATIONS for this year’s Zimbabwe International Trade Fair (ZITF) have begun in earnest, with ZITF company officials visiting Harare to meet with foreign diplomats in a bid to campaign for their countries’ participation at the 62nd edition of the fair, which is set […]

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Source: ZITF 2022 preps begin – NewsDay Zimbabwe

Stella-Nkomo-ZITF-DCEO

PREPARATIONS for this year’s Zimbabwe International Trade Fair (ZITF) have begun in earnest, with ZITF company officials visiting Harare to meet with foreign diplomats in a bid to campaign for their countries’ participation at the 62nd edition of the fair, which is set to run from April 26 to 30.

In a statement on Tuesday, ZITF deputy chief executive officer Stella Nkomo said company officials were in the capital to meet heads of diplomatic missions.

She said this year’s exhibition theme would be Re-think, Re-imagine, Re-invent Value Chains for Economic Development.

“The aim of the visit is to deliver personal invitations for exhibits as well as business delegations of buyers, financiers and investors from the participating countries. The meeting seeks to highlight the benefits of participation in the ZITF as well as to magnify the economic diplomacy role played by the trade promotion, technology transfer and attracting foreign direct investment” she said.

Nkomo said engagement platforms such as ZITF enhanced knowledge sharing and harnessed natural resources and skills needed to develop the nation.

“Some of the countries we are meeting have demonstrated successful optimisation of agricultural, mining and logistic value chains to improve economic growth in recent times,” she said.

ZITF officials have visited embassies of Angola, Botswana, the Democratic Republic of Congo, Ghana, Japan, Kenya, South Africa, Sudan, Sweden, Switzerland and Tanzania to rally support for foreign exhibitors.

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Shape up or ship out, RBZ tells banks 

Source: Shape up or ship out, RBZ tells banks – NewsDay Zimbabwe BY SHAME MAKOSHORI BANKING sector experts have thrown their weight behind the Reserve Bank of Zimbabwe (RBZ)’s move to tighten screws on operators that fail to comply with new minimum capital requirements, which came into force this January. After pursuing the moral suasion […]

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Source: Shape up or ship out, RBZ tells banks – NewsDay Zimbabwe

BY SHAME MAKOSHORI
BANKING sector experts have thrown their weight behind the Reserve Bank of Zimbabwe (RBZ)’s move to tighten screws on operators that fail to comply with new minimum capital requirements, which came into force this January.

After pursuing the moral suasion route on the issue of capitalisation, RBZ governor John Mangudya said in last week’s monetary policy statement (MPS) that shareholders would have to forgo dividends if their firms failed to meet the new minimum thresholds.

In a seemingly hardline stance, uncharacteristic of the man at the helm of Zimbabwe’s financial system, Mangudya wants shareholders in such banks to seek his approval before dividends can land in their accounts.

Under the new regime, banks are compelled to have the equivalent of at least US$30 million in minimum capital.

This will be important in making sure that the financial institution is safe and sound, and has fallback positions in the event of shocks. It was a crucial step by the RBZ chief, who has been working round the clock to avoid a recurrence of deadly financial sector failures, which rattled Zimbabwe’s once vibrant financial system between 2003 and 2008. Back then, dozens of big and small banks faltered under the weight of a rot in governance, which coincided with the global financial crisis.

In the end, an army of bank executives fled the country once the RBZ started demanding explanations. There has been less bloodbath since 2015, when the last remnants of a bad past collapsed, leaving behind a leaner, but reliable and significantly safer financial system.

Still, Mangudya, who is seeing through the final leg of his tenure at the RBZ, is determined to leave behind a clean sheet — and his new measures could be one of his final steps to galvanise a financial system that has generally been sound since he took over in 2014.

The sad thing is that while bank safety appears to have improved, the sector still has significantly less to offer to a market that so desperately requires capital after two decades of hard knocks. The trouble is that banks could revert to retaining their resources and making even lesser interventions in terms of lending should they fall under tremendous pressure to shore up their capital.

But capital market analyst Mike Nhete is of the opinion that bank executives and their shareholders should be in constant touch to see how they can navigate the capital demands.

“Banks management can approach their shareholders to raise capital,” he said.

“Some will opt to retain dividends to add to capital. But you find that some shareholders are ready to invest more to help banks meet their minimum capital requirements.”

He spoke as the central bank on Monday issued an update that Nedbank, one of five banks that had reportedly failed to meet minimum capital requirements in last week’s MPS, had raised enough capital.

“Further to the announcement in the monetary policy statement of February 7, 2022, that Nedbank Zimbabwe Limited was non-compliant with the minimum capital requirement as at December 31, 2021, the bank is pleased to advise the public that Nedbank has raised additional capital through a rights issue and is now compliant with the minimum capital requirement of ZW$ equivalent to US$31,1 million, against the regulatory minimum of the ZW$ equivalent to US$30 million,” Mangudya said in a market update.

The State-run AFC Commercial Bank, together with CBZ Building Society, National Building Society and ZB Bank are the other banks that failed to meet the US$30 million benchmark. However, they have all announced their game plans, which include merging some units in order to comply.

The RBZ said AFC was granted extension for compliance to December 2022, while Nedbank was ordered to comply by the end of June. Zimbabwe’s biggest banking group, CBZ Holdings Limited, recently said it was set to merge its major units to comply.

It said it would merge its flagship commercial banking unit, CBZ Bank Limited and CBZ Building Society. The banking group has applied to Finance minister Mthuli Ncube for approval.

The proposed transaction comes as CBZ is seeking to create a domestic and regional multi-asset class business in the financial services sector. The RBZ said NBS was granted an extension to comply by the end of March 2022, while ZB Bank, would merge with ZB Building Society. Generally, higher bank capital contributes to financial stability in any market. According to experts, well capitalised banks can absorb losses during a crisis or other distressful events.

They say in addition to financial stability, higher bank capital tends to curb risk-taking because shareholders would be having more skin in the game. Central bank capital requirements compel banks to comply with minimum ratios of capital in relation to their risk-weighted and unweighted assets. However, higher capital requirements could lead some banks cutting lending in the short run, according to experts.

“Before the global financial crisis, regulation in many countries allowed banks to take excessive risk without holding adequate amounts of high-quality capital, such as common equity,” according to the Global Financial Development Report 2019/20.

“But the Basel III framework, which was proposed after the crisis in 2009, aims to increase the quality and quantity of capital that banks can reserve in order to stand any forms of shocks along the way. Basel III has been widely adopted in big economies, such as those with membership to the Organisation for Economic Co-operation and Development (OECD),” the report said. In contrast, developing economies have been taking a more cautious approach.

According to experts, banks operating in high-income economies are holding more regulatory capital relative to their risk-weighted assets now than before the global financial crisis.

“The global financial crisis in 2007/09 revealed significant weaknesses in the regulatory and supervisory system, leading to major reform efforts. Experts agree that the crisis stemmed in part from regulatory and supervisory failures. These failures extended to different areas of banking regulation, but capital regulation was lacking as well, in the sense that it did not provide banks with enough high-quality equity capital to weather the crisis. It also did not sufficiently curb bank risk-taking before the crisis. There is a consensus as well that regulatory weaknesses stemmed in part from the lack of enforcement of existing regulations and the failure to use supervisory powers,” the report added.

It said: “Since the financial crisis, regulators have been revamping regulation by, for example, launching the Basel III framework. Capital regulation is a major element of this reform effort, so it is the subject of this chapter. The chapter begins by defining bank capital and summarising its main functions. It then discusses the reasons for regulating bank capital and reviews efforts to standardise capital regulation across countries (Basel I and II)”.

In his MPS, Mangudya said the sector remained adequately capitalised, with average capital adequacy and tier one ratios of 32,86% and 26,54%, respectively, above the regulatory minima of 12% and 8%, respectively.

The aggregate core capital increased by 59,11% from $63,39 billion as at September 30, 2021 to $100,83 billion as at December 31, 2021. He said the banking institutions bolstered their capital positions through organic growth including recapitalisation of revaluation gains on investment properties as well as capital injection by shareholders.

The RBZ said it was confident that the remaining institutions would meet minimum capital requirements by December 31, 2022. Mangudya said the banking sector asset quality also remained satisfactory with an average non-performing loans to total loans ratio of 0,94% as at December 31, 2021, against an international benchmark of 5%.

Total banking sector loans and advances increased by 61% from $142,79 billion as at June 30, 2021 to $229,94 billion as at December 31, 2021, largely attributed to the translation of foreign currency denominated loans.

  • This article first appeared in the Weekly Digest, a publication of Alpha Media Holdings

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