In any other normal country after the financial crisis such as of 2003-4 it would have been normal to carry out public, congressional or parliamentary hearings to get to the bottoms of the crisis. This would help to understand the problem and devise ways and regulations to avoid such problems. One of the main effects of lack of such hearings has been the haphazard and at times systematic scapegoat and blame shifting .There has been a concerted effort to blame the financial crisis on ENG and individuals such as myself. The crisis did not start at ENG Capital (ENG) nor was it caused by ENG. The RBZ started the crisis by refusing to honor US$ denominated loan from Trust Bank .This spread instability in the market causing widespread panic and a flight of deposits. Five years down the line no hearing has taken place and another financial crisis is upon Zimbabwe.
Trust was on the most wanted list after their reported meddling in political activities. Specifically Trust was accused of having donated more funds to the opposition and a smaller amount to ZANU .Rumors, research, investigation and intelligence all confirmed that Trust donated $ 10 million to Zanu towards the ZANU congress in Masvingo in October/November 2003.Mugabe reportedly hit the roof when he learnt that whilst Trust had given ZANU $10 million they had in the same period given MDC $13 million.
Trust Holdings and all firms linked to them became enemies of the state. Every transaction attracted serious attention. This included the Demutualization of First Mutual Life (FML).Trust and FML devised a complex arrangement which allowed the FML management to take over FML, Trust becoming the major institutional shareholder in FML .Simultaneously Trust at the same time becomes the controlling shareholder of FML through some cross-shareholding- technical-partner agreement which was structured as part of the FML demutualization. Trust was viewed as an unacceptable suitor of FML due to the above. ENG had partially assisted the demutualization process by participating in the private placement and taking up the debenture bond .Rapid Financial Holdings was also part of the consortium. None of these four institutions ENG, Trust, Rapid and FML none survived in their original form. And part of the problem was Trust’s attempt to finance the Opposition whilst trying to placate the ruling part with a smaller donation.
It is also important to state that the government of Zimbabwe has never really come to grips with the empowerment challenges that the country confronts and the version of entrepreneurship that has been accepted by the political elites is the Gono type whose humble background and profile impresses many traditional politicians. During the Masvingo Conference of 2003 the President went to great lengths to thank “ traditional” business man like bus operators and shop owners who had financed and assisted in the liberation war. The new breed of entrepreneurs was not to be trusted he said. And all this was coming from the above background information whereby the ruling party felt particularly betrayed by indigenous entrepreneurs especially those in the Financial services whom it went on to target for various crimes
As a way to engineer Trust Bank fall Dr Gono and his RBZ team started to make unheard of goal post shifting maneuvers .Firstly the RBZ owed Trust Bank approximately $US 20 million. Trust had sourced this money from its exporting clients at parallel market rates .Dr Gono then unilaterally said the RBZ will repay the Trust Loan in Zimbabwe dollars at the official rate. Trust tried to resist this to no avail. Then a smokescreen was conveniently created that Trust was into buying bricks and cars and all sorts of other-non banking activities. This was merely a smokescreen to cover up the RBZ refusal pay back the loan in either US$ OR the ruling parrarel market rate.
Gono has his admirers and supporters who passionately believe in him and the direction that he has taken. It is important that a conversation be pursued on Gono’s role in advancing the interests of the country. We all may not agree and that is normal but to accept to sit on the sidelines will be irresponsible.
This created a hole in Trust Balance sheet since they couldn’t replace the Forex using the official rate. At the time Trust was the biggest bank by assets in Zimbabwe and almost every institution was exposed to them. This caused panic and chaos in the market with widespread fears that money banks would drown as Gono was now refusing to honor all foreign denominated loans granted by local banks.
In a typical fashion, anonymous high-level sources were quoted by the media saying that banks and asset management firms - some of which were allegedly used as conduits for money-laundering activities and speculative investments - were struggling to cope with new regulations ushered in by Gono's recent monetary policy statement. Some of the statements from these nameless and faceless sources were saying that most of the locally-owned banks were facing a serious liquidity crisis and bank managers were reported to be holding emergency meetings, including on Christmas day, to find ways of surviving in the new environment. I am certain the executives at Trust are fully aware why their Bank was squeezed ,scandalized and then nationalized.
It is unfortunate ENG and myself have been credited or discredited with causing the financial meltdown when its clear that the executives at Trust and in many other financial institutions had made a conscious decision to assist a political party they felt offered hope to their country. I hope I will live to see the day when Zimbabwe’s own Oprah Winfrey and Bruce Springstein in the form of Amai Chisamba and Tuku can freely endorse and support a political candidate/party of the choice the same way Oprah and Springstein openly campaigned for Barak Obama .At this stage it must be noted that some Zimbabweans seem to believe good things happen by accident, many have been going to town about the achievements of Barack Obama yet if a business person tries to lend a hand to a politician most will immediately tell you to keep in your domain - business. And you are told to leave politics to politicians, yet the nation building project is beyond capacity of any politician or any single political party.
One must point out that Gono was the CEO of the Commercial Bank of Zimbabwe (CBZ) and was not a significant shareholder of the institution and, therefore, as a person who rates himself highly he must not have been happy to know that people like Nyemba, Sachikonye and others, whose names were not in the President‘s favorite side, were shaking the market without any fully being supportive of the then ruling party. It was natural that Gono had to stop the leveraging that was taking place in the asset ownership business of Zimbabwe whereby indigenous people who would otherwise have no access to acquisition capital now had a new vehicle to access capital for the kind of transformation that has eluded the post colonial government of President Mugabe notwithstanding the empty rhetoric on empowerment and indigenization issues. Gono would publicly claim that CBZ does not make “unpatriotic” profits by trading on the parallel market yet he is a leading player on that market.
President Mugabe was on record at the Masvingo Congress of 2003 castigating the new breed of entrepreneurs who to a large extent had banking experience. Accordingly, when Gono was appointed his first target had to be the banking and asset management industry. ENG was the most aggressive at the time with principals who were fairly young and independent. According to the ZANU-PF way of thinking, companies like ENG, Trust, and FML should have been nipped in the bud because their way of doing things, their age, their capacity to mobilize capital defied what is generally accepted as the liberation way of doing things.
The most improbable things are now expected and predictable in Zimbabwe. History will not judge our generation correctly if we refuse to fully appreciate the depth of the Zimbabwean crisis and the role that people like Gono are playing in making the country sink deeper into hopelessness. It therefore imperative that a conversation takes places about this. No matter how that conversation maybe so uncomfortable for the participants. When people sit and try to do case study of the 2003-4 financial crisis its true roots must be identified and not glossed over to please certain people who control the media.
As Zimbabwe seeks to develop a conducive business environment a cultural shift is necessary .There is a general retrogressive line of thinking that continues to emerge. In fact, the thinking is that if President Mugabe does not know of something then it must be wrong. Equally, if Gono has not benefit from it, seen it and experienced it then it must be criminal. It is common-cause that the President does not trust the market and also people who work in the private sector. He genuinely believes that if a person is smart then he should be under his control after all he can boast that even the likes of Jonathan Moyo, Simba Makoni, and others have been his protégés and there are many more that would die to be considered as cabinet ministers. The President is old fashioned to the extent that he easily takes pride in having a team that lies to him day-in day-out about what is going on despite clear evidence that this trend is ruining the nation.
For too long Zimbabweans have been trusting the wrong messengers of hope when change will only come if the truth is told without fear or prejudice. I doubt that the USA would force into exile Bill Gates and Warren Buffet go to live in Mexico or Canada the same way Zimbabwe has forced Strive Masiyiwa and Mutumwa Mawere to be exiled in South Africa? Should the government of Zimbabwe not be at forefront to ask these entrepreneurs to come back and help develop the country and halt the economic meltdown?
Gilbert Muponda is a Zimbabwe born Entrepreneur; he can be reached at gilbert@gilbertmuponda.com
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