Zimbabwe's Political Economy, Governance In Shambles – Herbert Nkala

Herbert Nkala, current Chairman of FBC Financial Hldings Limited (FBCL) said despite the fact that last year Zimbabwe had grown by an impressive 8,1 percent, this growth was likely to be “slackened as political and business uncertainty increases”.

Nkala, past Chairman of the government-controlled Zimbabwe Newspapers (1980) Limited, another Zimbabwe Stock Exchange (ZSE)-listed concern, said: “Having attained a growth of 8,1 percent in 2010, the economy is finally starting to show signs of sustainable recovery.

“However, growth is likely to be slackened as political and business uncertainty increases. There is need for deeper reforms focused on economic as well as sector policies to consolidate recovery, address vulnerabilities, and put the economy on a path to higher growth and employment.'”

Nkala is also current Chairman of the wealthy Turnall Holdings Limited (THL), the cash-cow of FBC Holdings Limited.
Last year Turnall chalked up a profit of more than $4,9 million and injected this into the FBC Holdings’ dwindling coffers.

Turnall then became the biggest contributor to Group profit, with a profit of $4,9 million before income tax.
FBC Holdings Limited then immediately made a profit of about $1,5 after the Turnall windfall.

“There are several scenarios for the economy ahead, but all of them are ultimately linked to Zimbabwe’s political economy and governance situation,” Nkala told FBC Holdings shareholders gathered in Harare.

“External finance will be necessary for the recovery to take hold, but finance will not come in unless policy uncertainty is reduced.

“Inflationary pressures will remain substantial due to firming foreign currencies and, in particular, the South African Rand, as well as possible wage increases.

“The FBC Group’s diversified portfolio, lean structure and adequate capital resources leave it poised to seize opportunities as they arise in the recovering economy.”

For the period ended December 31, 2010, FBC Holdings Limited recorded a profit before income tax of $5 million.

The Bank’s capital at $23 million comfortable exceeds the minimum regulatory capital requirement of $12,5 million.
Nkala said it “leaves room for other capital demanding initiatives”.

The Reserve Bank of Zimbabwe (RBZ), currently under the stringent guidance of Governor, Dr Gideon Gono, has laid down these stringent minimum capital regulatory requirements for all local commercial banks operating in the country.

FBC Limited is listed on the Zimbabwe Stock Exchange (ZSE) with a market capitalisation of $20 674 978, up from $12 623 465 in 2009.The share price currently stands at $2c each.

It’s Chief Executive is John Mushayavanhu, who also doubles up as President of the Bankers Association of Zimbabwe (BAZ).