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Gono now backs indigenisation laws

by Sapa-AFP
01 February 2013 | 3546 Views
Zimbabwe's central bank chief who has previously warned government against the seizure of foreign banks on Thursday appeared to make an about-turn, but cautioned the process must be orderly.

"All banks should observe the laws of the country including the indigenisation ... law," Gideon Gono said in his monetary policy statement in Harare.

"The process to indigenise the banks should, however, take cognizance of the sensitivities around the operation of the banks to restore confidence, trust and stability in the sector."

Zimbabwe in 2007 adopted a law that forces foreign owned companies to sell 51 percent of shares to locals.

But last year the central bank governor warned the country's fragile economy could grind to a halt if the government rushed its planned seizure of majority stakes in foreign-owned banks.

Britain's Standard Chartered Bank and Barclays Bank, and South Africa's Standard Bank, are just some of the major foreign banks with operations in Zimbabwe.

Top African conglomerate, Ecobank earlier this month complied with the local regulations giving up majority stake stake to locals.

The black empowerment drive, which is being spear-headed by long ruling President Robert Mugabe saw the world's number two platinum miner Implats cede 51 percent of the shares in its local unit Zimplats, to Zimbabwean investors.

The campaign has been described as illegal and a threat to Zimbabwe's ailing economy by Prime Minister Morgan Tsvangirai.

Gono said Zimbabwe's economy remains fragile with low export earnings, lack of credit lines or foreign direct investment resulting in the liquidity crunch.

The southern African country which trashed its local dollar because of hyper-inflation four years ago in favour of hard currencies is facing the problem of fake US dollar and South African rand notes in circulation.

"Under the multiple currency system, the proliferation of counterfeit notes has gathered pace in a worrisome manner," he warned.

Zimbabwe's central bank which has complained about banks charging steep bank charges and interest rates of up to 30 percent announced a lending rate ceiling of no more than 12 percent.

Gono Indigenisation

Source: Sapa-AFP


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