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Dr John Mushayavanhu (left), Image Credit FBC Holdings

Do you remember how excited we were when we heard that Mthuli Ncube was going to be Minister of Finance? I mean, how could we not, here was a non-politician coming in with a PhD in Mathematical Finance and having worked as Chief Economist and Vice President of the Africa Development Bank.

How did all that work out for us? All I can say is the economy is not where we thought it would be. I think Mthuli would agree with that.

Of course, you could argue he is not really in charge, kind of like how former RBZ Governor Gideon Gono says he took orders from the President. Or you could argue we would be in a much worse place if it weren’t for his austerity measures and aggressive tax regime.

However, even as you argue this way, you are forced to admit that the economy is in tatters. That’s the reality, isn’t it? President Mnangagwa went with non-politicians like Mthuli and Kirsty Coventry, which was good, but it really hasn’t worked out for them.

The worst thing about it is that the whole experience has made politicians of the non-politicians. Mthuli ran for a parliamentary seat and lost.

I mention all this to say, there is a new Reserve Bank of Zimbabwe taking over from John Mangudya at the end of April. Dr John Mushayavanhu comes in as a successful banker with loads of real world experience but this time around the excitement is a bit tampered for me.

John Mushayavanhu

Here is the summary of his profile as given by FBC Holdings,

MBA-(UK) Diploma In Management-(UK), AIBZ

A career banker, John has over 30 years of experience in the financial services sector, gained through senior positions in corporate and retail banking he held with a local multinational bank. He joined FBC Bank as an Executive Director in the Corporate Banking Division in October 1997. After the establishment of FBC Holdings in 2004 he was appointed Managing Director of FBC bank and Deputy Group Chief Executive. John was appointed Group Chief Executive of FBC Holdings in June 2011. He is past President of the Bankers Association of Zimbabwe and he sits on the Boards of Turnall Holdings among others.

Mushayavanhu owns 7% of FBC Holdings. When we look at how he managed FBC, it provides more fodder to the idea that upper management should be owners too to be good stewards.

There is a lot we can argue about but what cannot be disputed is FBC’s trajectory under Mushayavanhu’s leadership. FBC came from relative obscurity to now having the 4th largest loan book in the country.

In terms of share price, FBC stood at around US$8 a share in early 2017 and that has fallen to Z$3200.7 (about US$0.23) in February 2024.

However, FBC has regularly ranked as a top listed company on the ZSE, first getting in the Top Five Listed Companies in the Zimbabwe Independent Quoted Companies Survey in 2018. You can dig deeper into FBC history here.

FBC also got a most lucrative client base when Standard Chartered announced they were leaving the country and they acquired 100% of it.

Mushayavanhu was in charge through all that.

Mnangagwa – ZANU links?

Apparently Mushayavanhu has been friends with President Mnangagwa for decades now. If not friends then business associates at the very least.

The Zuva Petroleum story is probably one Mushayavanhu is tired of hearing about. He acquired a controlling stake in Zuva through his investment firm and that should have been the end of it.

Analysts believe Mnangagwa was involved in that deal and has some shareholding in Zuva. It is believed Mushayavanhu’s investment firm was a front and the actual shareholders were some foreign Mnangagwa allies.

It is also believed that Ketani Joshi was involved in that deal too. This man was one of the founders of FBC and retains “substantial” interests in the organisation. So, I guess it is easy to understand if he and Mushayavanhu work together extensively.

Joshi’s family used to run Zanu-PF businesses and when they helped start FBC, it was all people needed to conclude that FBC was a Zanu organisation in the background. A sentiment that many share today.

FBC – DRC

It is difficult to not to conclude that FBC is a Zanu asset, especially when you take into account that FBC was the sole bank that handled the financial transactions related to Zimbabwe’s participation in the war in the Democratic Republic of Congo.

All of the over 11,000 Zimbabwean troops deployed in the DRC were paid through this bank.

You could argue that this exclusive deal helped get FBC off the ground.

Friends rewarding friends?

The above is just the most known story that shows possible links between Mushayavanhu and Zanu and Mnangagwa. It’s not the only one.

The Africa Report plainly states “Mushayavanhu and Mnangagwa were business associates and worked together when Mnangagwa was ZANU-PF’s secretary for administration.”

And apparently, this working together extended to Zanu jobs, “Mnangagwa and Mushayavanhu also worked together in ZANU-PF’s business interests in Zimbabwe and during the Congo War of 1998 to 2000 in the Democratic Republic of Congo,” Africa Report adds.

Looking at this, it feels like Mushayavanhu’s appointment as RBZ Governor is just a case of friends looking out for each other.

Tampered expectations

This all means I have low expectations as Mushayavanhu takes office. Not because he is not a capable banker, no, I believe that he is a very capable banker.

My low expectations have mostly to do with ensuring I don’t end up disappointed. Very capable people that have worked with the Zim govt have failed. I don’t see why this would be any different. I hope it will be but I’m not even crossing fingers.

Then if you’re really cynical you can talk about FBC succeeding under Mushayavanhu’s leadership only because they got lucrative Zanu deals they would not have gotten otherwise.

Whatever the case, I hope Mushayavanhu succeeds in his role as RBZ Governor for all our sakes. At this point we all have to root for him.

Also read:

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Samora Machel Avenue showing the Financial District

The Zimbabwean government will need to make up its mind on financial inclusion soon. Their love-hate relationship with mobile money and Lite bank accounts needs to stop.

In its never-ending fight against currency manipulation and resultant depreciation, the Reserve Bank of Zimbabwe often moves to promote digital channels over cash.

It’s a hard sell for Zimbabweans in the best of times, so when you consider the tax (IMTT) on those transactions, the transaction limits, the fast depreciating ZW$ and the hustle of opening said bank accounts, you can see why the RBZ won’t succeed in that effort.

There just isn’t any good reason to move from cash, even if it’s inconvenient to use at times.

We have talked ad nauseum about the lack of trust people have in their central bank. However, today let’s talk about the Lite bank account.

The lite bank account

Consider this, the true pioneers of the Lite bank account – Steward Bank – have since moved on from it. Many other banks no longer offer that account too and it all goes back to the RBZ’s policies.

I was on the market to open a few bank accounts and found this out for myself. I had an interesting conversation with some bankers who told me that the RBZ had been on their case for not taking Know-Your-Customer (KYC) seriously.

See, Lite bank accounts, also known as KYC-lite accounts, like mobile money accounts, only require an ID to open. Unlike the full savings and current accounts that require proof of residence, a payslip and a confirmation of employment letter.

This is why Lite accounts are (were?) popular because in urban areas where most people rent, getting proof of residence is a challenge.

Some landlords won’t sign affidavits, some won’t release utility bills, and some are subletting and cannot risk the actual house owner finding out about their arrangements.

Then for the majority who are informally employed, the need for a payslip and confirmation of employment means it’s either cash or mobile money for them.

So, the Lite account was crucial in the RBZ’s financial inclusion efforts.

Why the Lite account is dying

The RBZ went on a rampage against mobile money operators (mostly just EcoCash), accusing them of sabotaging the economy. The central bank had noticed that some money changers/forex dealers were using mobile accounts to trade.

So, since that episode, the RBZ has been torn on mobile money and Lite bank accounts. Yes, they allow for better financial inclusion and may help ease the demand for cash. However, some elements may abuse them and help tank the local currency.

“The Reserve Bank has repeatedly emphasized the need for every banking institution to promote adherence to the letter and spirit of KYC principles,” said the RBZ in a circular.

So, the banks paid attention when EcoCash was grilled for its KYC-lite situation. Then the RBZ started grilling the banks on their own KYC situations, claiming that economic saboteurs were using these Lite accounts to trade.

All while claiming to promote financial inclusion on the side.

Some banks, like BancABC and Steward, found this hounding a little too much to bear and simply stopped offering lite bank accounts. Apparently, the little business they got from the Lite accounts was not worth the headache of dealing with the RBZ and the Financial Intelligence Unit.

Cash economy

The RBZ is essentially telling the masses to use cash and that’s what the market is doing. If you can help it, you are not going the digital payments route.

I feel sorry for banks because we oftentimes hurl vitriol at them for being snobs when it comes to opening accounts with them. Well, the RBZ is to blame.

You would have thought that with the transaction limits placed on lite accounts, the RBZ would be satisfied that they are not being used to sabotage the economy.

Alas, they are busy abusing financial service providers about how Lite accounts are being used, demanding better KYC, which defeats the purpose. It’s ridiculous, if you ask me.

Also read:

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