The Sunday Mail
ZIMBABWE’s banking sector has been a potpourri of both exciting and trying times in the past 25 years.
Nigel Chanakira
The liberalisation of the industry in the 1990s ushered in a new breed of black entrepreneurs, educated, savvy and eager.
Spurred on by deliberate Government policy interventions, the banking industry gradually evolved as haven for black bankers. Undoubtedly, there were welcome changes in a sector that was previously dominated by white business investors.
The new entrepreneurs became rich and affluent, but, unfortunately, they threw both integrity and ethics out through the window. The country subsequently suffered arguably its worst banking crisis in history in the 2003 and 2004 period, which claimed the scalp of nearly ten banks.
Millions in depositor’s funds were squandered.
One of the charming breed of bankers that emerged was Dr Nigel Chanakira, who, at the age of 26, was already active in the sector. Our business reporter Enacy Mapakame (EM) spoke to Dr Nigel Chanakira (NC) to discuss the past, present and future of banking in the hands of local business people.
EM: You are recognised as one of the pioneering black businessman to break into the erstwhile white-dominated financial industry in post-independent Zimbabwe. Could you share with us the journey that you have walked in banking, and in business, to this day?
NC: Thank you for the recognition and compliment. I was amongst the breed of black young, entrepreneurial bankers of the 1990’s.
We sparked off an exciting decade of a different type of approach to banking in Zimbabwe which triggered a spurt of financial market vibrancy within the private sector through our programme “Making Money Make Sense”, and then a successful phase of privatising a handful of public enterprises (Rainbow Tourism Group, Dairibord, Cottco, SeedCo,) taking them to list on the Zimbabwe Stock Exchange.
Interestingly, it was the then Governor of the Reserve Bank of Zimbabwe Kombo Moyana who had perceived and challenged blacks to enter into banking as owner- managers as many were executives and consultants for banks within and outside Zimbabwe.
I was privileged to be part of these so-called pioneers and what distinguished me at the time was that I was the youngest in that era to head a start-up bank at 28 years old (after having been appointed a director at Bard Investment Services (Pvt) Ltd at the age of 26). I led a team of four other partners to build an exciting brand called Kingdom Securities, which, in the space of seven years, became a household brand with numerous banking and business accolades to show for its stockbroking, discount house, asset management and microfinance franchises.
I then took early retirement in 2001, aged 35-years-old, through sheer exhaustion and a couple of run-ins with the authorities and then embarked on multinational business career, which commenced with the purchase of Success Motivation Institute (Africa), a motivation and leadership distribution franchise in 2002 whilst based in Cape Town, South Africa.
We went on to open a forex bureau in London, partner with other banks in Malawi, Zambia and open a card processing centre and an offshore bank in Botswana.
EM: In what way do you think Government policies have helped local people to becoming successful business people in the financial industry, or at least, create opportunities that promote greater participation by locals as business owners within the sector?
NC: I know for a fact that it was the psyche and policies of the Government of Zimbabwe that led them to grant licenses to black Zimbabweans, which was a show of confidence in our own people that led to the success of locals. Further tacit support through government mandates, for example, privatisation and institutions offering support to blacks led to their success. During our times, capital requirements were very reasonable and were not prohibitive.
EM: Several banks owned by black business people have crumbled in the past 20 years, beginning with Mr Rodger Boka’s United Merchant Bank, then Trust Bank, Royal Bank, Barbican Bank, Time Bank, CFX Bank and your own bank, Kingdom Bank. Yes, banks fail all over the world, but 20 years is too short a time for banks that many, and so young, to go under. What does this say about the competence of black business owners in banking? Where did they get it wrong?
NC: The fact is I sold my own shares in AfrAsia Kingdom Holdings Ltd on 5 September 2013 and it changed status to a foreign-controlled bank. Based on media reports, the renamed AfrAsia Bank Zimbabwe handed back its license at the end of March 2015 due to liquidity challenges and its failure to recapitalise. It would be unprofessional for me to make further comments on this bank without substantive facts on what transpired without the consent of its subsequent shareholders, board and management.
Nevertheless, it is true that more than 10 local banks have collapsed in Zimbabwe due to different reasons, if one were to carefully analyse each one of them. We should note that we have had two banking crisis in Zimbabwe: one under the Zimbabwe-dollar era and the more recent one under the U.S. dollar era. The two are somewhat different in origin.
It has generally been a tough and bruising outing over the past two decades and therefore only a handful of local banks still exist. Some of these surviving local banks have held out very firmly, churning out commendable results and accolades to depict the competency of Zimbabwean bankers. Further, our black brothers at the helm of the more dominant remaining foreign banks have shown much “entrepreneurial” skills in navigating the treacherous Zimbabwean financial waters.
I hope that these will one day emerge as owners of their own banks too as we did before. These are boom and bust cycles that happen in any developing country where macroeconomic instability may develop.
EM: What lessons can Zimbabwean entrepreneurs draw from the crisis that have hit the banking industry in 2004 /05, then the failed Zimbabwe Allied Banking Group project and the ensuing confidence and liquidity crisis in the sector?
NC: My views on this must be qualified in that I was based in South Africa during those years. My understanding is that hyperinflation, changes in money market settlements, hoarding forex, and insider loans, tightened surveillance, which unearthed non-banking related activity amongst the local bankers, etc. triggered a crisis during that period; thereby, triggering systemic contagion effects on indigenous banks. The “ZiBag” banking project conceived within the central bank, whilst good in principle, simply lacked the support of most of the local shareholders.
The moral of the story, I guess, is that forced marriages in business don’t work, even if chaperoned by a powerful marriage officer. Perhaps moral suasion is best or else let the market sort out its own problems and then the players learn, although the mess may be irreparable in a sector as sensitive and delicate as banking.
EM: In 2007 your company, Kingdom Financial Holdings Ltd, merged with Meikles Africa Ltd to create one of the most diversified groups on the Zimbabwe Stock Exchange. That marriage, in which you were chief executive, lasted barely five years before disintegrating. Now, with the benefit of hindsight, do you believe the decision to merge at that time was the correct one? What other options were available?
NC: I still have the conviction that the merger saved the then Kingdom Bank from collapse in 2007 and so it was the right decision under the circumstance. Indigenous banks were no longer the flavour of the day back in 2007 and without strong capital underpinned by a sustained business model strategy.
With the perfect 20/20 vision of hindsight, I could venture to say that we could have structured the deal differently to stave off the monumental shareholder battles that subsequently emerged over the three years of the then Kingdom Meikles Africa Ltd. Better character assessments, deal structuring, due diligence as well as sober egos could have saved the day.
EM: The Botswana high court has recently ruled that Kingdom Bank Africa Ltd, in which you are a major shareholder, goes into liquidation. What went wrong at KBAL? What is the opportunity that the bank can be rescued, if at all?
NC: Simple. KBAL suffered the fate of having too many of non-performing loans skewed within Zimbabwe, poor management and an uncooperative regulator in the Bank of Botswana.
Sadly, KBAL will be liquidated as the Bank of Botswana has deemed it so and our sterling efforts of a rescue were totally ignored, if not snubbed. My grave concern has been for the recovery of a greater portion of depositors funds, if only the liquidator and depositors would permit this. This is still possible but will require the full cooperation of the majority of the depositors, creditor and the liquidator.
EM: After KFHL and KBAL, where to now?
NC: Just a reminder, (when) I left the executive employment of KFHL in 2001 and in 2002 I launched into the people motivation and leadership development business, Success Motivation Institute (Africa). I was asked to come back for a rescue operation of KFHL in 2006 by its majority shareholders Meikles and Econet and then offered to head Kingdom Meikles Africa Ltd (KMAL) in 2007. After successfully de-merging KFHL from KMAL in 2010, I served as a consultant until 2013. It’s been two years since I sold my shares in AKHL.
I now mentor, coach, facilitate management and leadership individuals and teams full time through SMI (Africa). I also do bank debt recoveries and restructuring, private equity and I consult mainly for multilateral institutions and multinational companies. Finally, my latest appointment is to represent PUM, a Dutch SME developmental agency which brings in retired and experienced experts from the Netherlands, to assist local entrepreneurs grow their local and international business.
In essence, I assist entrepreneurs.
EM: Would you take up a post if appointed in the public sector?
NC: Only if it is a divine appointment. I would need a Moses-type burning bush experience with God to be convinced and it would have to be a very compelling opportunity that would get me to move to the public sector. I am thoroughly a private sector player who will lend a hand in the public sector when asked to through non-executive appointments, for example, serving at the Zimbabwe Investment Authority, as I do, and then offering advice and consultancy where I’m required to.
My first job was as a junior economist in the public sector at the Reserve Bank of Zimbabwe, which was a great experience. So, I did my bit in the public service. I have gained much more satisfaction in the private sector, which is my preferred domicile.
