MUTARE- The Zimbabwe Coalition on Debt and Development (ZIMCODD) has questioned the prudence of intended partial privatization of the country’s sole savings bank equity, under state control in trust for the public.
In a strongly worded press statement ZIMCODD, a social and economic justice organization said the government must reverse ongoing measures to partially privatize the People’s Own Savings Bank (POSB).
It said privatization of the POSB, the biggest bank by market share, was not in national interests as it ‘entails the transfer of parastatal ownership and control from the public to the private sector and threatens the public interest.
ZIMCODD said POSB’s infrastructure and a distribution network which has a wide reach, should not be compromised in any way, as customers have relied on its efficient utilization and the bank’s people-centered ethos.
“The People’s Own Savings Bank is the only savings bank in Zimbabwe. It is wholly owned by the Government on behalf of the people of Zimbabwe. With 460,000 customers country-wide, POSB has about 20% of the market share making it the leader in the customer base of all Zimbabwe’s banks.
“Why should the People’s Own Savings Bank become profitable in the hands of other owners not the people of Zimbabwe?
“The poor, pensioners, youth, informal sector traders, and ordinary men and women who have banked with this grassroots-based bank on the basis of trust in the bank’s people-centered ethos. This goes against the POSB Act which states that it is a people’s bank that must remain in the hands of the State.
“The Act’s intention is for government to defend citizens’ long-term financial interests in a volatile market economy through mechanisms such as a Bank dedicated to serving the public interest,” said ZIMCODD.
In a 2018 Banks and Banking Survey, POSB was confirmed as the best performing bank in terms of efficient utilization and posted a net profit of ZWL$24,7 million during the six months ended June 30, 2019, compared to the ZWL$8,11 million recorded during the same period in 2018.
ZIMCODD said this ‘objective fact undermines Government’s argument that privatization would foster increased competition, which would reduce the cost of financial intermediation and improve bank profitability.’
To proceed with privatization government was challenged to first ‘present clear evidence of the proposed benefits of the sale for public scrutiny and Parliamentary debate’ said ZIMCODD.
Parliament was urged to safeguard the autonomy of the people’s Bank and ‘provide critical oversight to ensure that the Bank remains faithful to its public mandate.’
On its part government intends to sell off shares in POSB to enhance its ‘capacity to underwrite more business to the productive sectors, or access expertise and technology to improve banking operations and competitiveness.’
However, instead of selling off the Bank, ZIMCODD said the government must invest and further capitalize on the Bank’s expansion and modernization for improved efficiency and competitiveness.
“Just as Government has deployed taxpayer’s money to assume debts and rescue preferred industries, it is time that Government deploys public money to safeguard the only remaining banking Institution created in the public interest.
“There is no justifiable need to sell off the POSB. It is presently one of the few profitable and efficiently managed, State-owned Enterprises. Instead of privatizing POSB, the government should increase the autonomy for this state-backed bank and enforce strict regulatory oversight by the banking supervisor,” read part of the statement.
