Dear Editor,
PRESIDENT Hakainde Hichilema told the European Parliament in 2022, “Zambia is back in business.” Being “back in business” assumes Zambia “is open for business” and that Zambian institutions, recognise, appreciate and will safeguard both investors and their investments in the Zambian economy.
Sanctity of contract, transparency in business dealings, respect for due process and respect for the rule of law. Buzzwords that are part of the universal lexicon and touchstones for international investors.
Whilst they appreciate opportunities in emerging markets such as Zambia, international investors measure their investment criteria against these universal principals. Principals that respect money, respect investors and underpin and nurture further investment growth.
Breach these principals, and as they say, “actions speak louder than words” and where Investor A is treated with impunity, the word goes viral; given what happened to that Investor A, the resounding chorus of other international investors is, we don’t believe, Zambia “is open for business.”
It is thus, to our general astonishment, that on April 2, 2024, we read a statement from the Bank of Zambia (BoZ) that effectively brought to an end the 28-year history of Investrust Bank Plc (Investrust).
Investrust, a Zambian-owned financial institution, with 20 branches in six provinces was a proud part of the fabric of the Zambian banking community.
Yet Dr Denny Kalyala, BoZ Governor, said pursuant to Section 64 of the Banking and Financial Services Act No. 7 of 2017 (BFSA), BoZ took possession of Investrust Bank Plc. The Governor’s statement read, that “it had numerous engagements with the shareholders to recapitalise the bank,” yet the shareholders had been unable to come up with a plan. Further, the Governor said, BoZ was working with key stakeholders, including the government, on mechanisms for depositors not to lose any of their money.
Currently in November, does anyone know if depositors’ funds were safeguarded and full value returned? What about depositors who held funds in foreign currencies?
Were these foreign currency deposits returned in their currency of deposit or, were they without explanation, converted to Kwacha and so, now their value severely diminished?
Does anyone know, the plight of the hard-working Zambian staff of Investrust? Their benefits, pensions etc? They’ve gone to Court and claimed against BoZ and are fighting for their rights as Zambians, fighting to protect their families. Questions, questions, questions. Questions needing answers.
Who were the shareholders, BoZ is said to have held numerous engagements with? A Google search describes the shareholders as being 1) ZCCM Investments Holdings Plc with 71.4 percent 2) Bank of Nevis International Limited (BONI) 24.08 percent
3) Stanbic Bank Zambia Pension Scheme 4.0 percent and 4) Justin Bevin Zulu three percent. Is it ZCCM, with a 71.4 percent shareholding that was not willing to recapitalise the bank? The majority shareholder of ZCCM is the Industrial Development Corporation (IDC) and the Government of the Republic of Zambia (GRZ).
Did Bank of Zambia fully and openly engage with any of Bank of Nevis or Stanbic Bank Zambia Pension Scheme or Justin Bevin Zulu, a Zambian national?
If it is true that since 2022, BONI had penned an MOU with IDC, that would see IDC dilute its 71.4 percent and allow it focus on its mining interests, were the Governor and Deputy Governor BoZ, cognisant?
Further, that BONI was in the throes and had engaged senior Investrust management to secure a US$40 million commitment from Afreximbank and a further US$10 million commitment from a South African investor and had gotten buy-in from Justin Bevin Zulu?
So, a ZMW 1.35 billion injection into Investrust had been primed, ready to go and would not have cost taxpayers and Government a single Kwacha.
It would have resulted in Investrust staff retention, a bright new fintech hub start for Investrust and Investrust remaining part of the fabric of the Zambian banking community. If true, were the Governor and Deputy Governor BoZ, cognisant? Questions, questions,questions. Questions needing answers.
The Investrust debacle leaves a collective sour taste in all our mouths. It appears to be unclear, and it will be that very lack of clarity or even a perception of a lack of clarity that’ll rob Zambia of its stature that it “is open for business.”
Today, The Bank of Zambia has left BONI, an aggrieved party, with no other choice but to file a lawsuit in which it seeks US$40 million (ZMW 1.08 billion) compensation.
Legal luminaries say the BONI position, like the claim of the Investrust aggrieved staff, is transparent and clear and more than likely BoZ will have do the right thing, and offer restitution to both.
If Zambia “is open for business,” then incidents such as the Investrust catastrophe must never happen again. Every Zambian prays that institutions respect investors and safeguard their investments and by so doing, encourages further invstors.
Due process and respect for the rule of law are paramount and must be the cornerstone of a Zambia that is “open for business.”
GEORGE PHIRI.
Author
