POSB resurrects partial privatisation project

MUTAPA Investment Fund subsidiary, POSB, has resuscitated the partial privatisation project after suspending it in August last year, as the Government remains committed to ensuring maximum returns on investment from state-owned enterprises.

Early last year, POSB indicated that it had presented the final partial privatisation strategy document to the Minister of Finance, Economic Development and Investment Promotion, Mthuli Ncube, but the process was later halted.

The partial privatisation agenda presents a potential gateway to capitalisation of the bank and capacity to finance essential sectors of the economy given the backing of a stronger financial muscle it would have gained.

Analysts consider partial privatisation as a tool for improved efficiency as private investors typically bring in resources, expertise and market-driven practices that help enhance the bank’s operations.

They say that selling a portion of the bank to private investors will enable POSB to raise additional capital, which can be used for business expansion, technology upgrades, or to improve its financial position.

Government controls 100 percent shareholding in POSB, a bank with over 800,000 account holders, and sees the privatisation gesture as lucrative for the bank’s growth.

It has an infrastructure and distribution network that no other bank in Zimbabwe possesses.

The partial privatisation drive is a good move as it will enable POSB to capitalise and underwrite more business.

Some quarters say partial privatisation will enable the bank to make quick and strategic decisions without being constrained by Government regulations or bureaucracy.

Accountability will also improve as private investors often demand more transparency from the bank’s management, leading to better governance practices and decision-making processes.

While addressing the 2023 annual general meeting, POSB chief executive officer Garainashe Changunda, said the bank was looking for a partner with the same strategic intent and capacity.

He said the processes and work streams had been put on hold because the shareholder was looking at various options for recapitalising the bank.

“The partial privatisation project, which had been put on hold in August 2023 pending the review of new proposals which the shareholder had received and was considering, has now been resuscitated.

“The bank, with the guidance of the board of directors, is expected to consider options available to conclude the partial privatisation project.

“The bank is open to offers from like-minded investors, who can help drive the vision of the bank to offer numerous banking services through digital channels,” said Changunda.

He said the shareholder has allowed the board to look at various options so that the partial privatisation of the bank can be concluded.

Partial privatisation can help the bank become more competitive in the market by enabling it to adopt innovative strategies, products and services that can differentiate it from other banks.

This comes as POSB posted a net profit of $110 billion for the 2023 financial year to December, recording a 99 percent growth from the $11,3 billion that was posted prior year.

For the trading period to March 2024, POSB posted a net profit of $259,20 billion against a budgeted profit of $76,79 billion.

As such, it managed to declare a dividend of US$ 589,341 to the shareholder.

“A significant portion of our revenue in 2023 was in US dollars. So, we want to declare our dividend in US dollars,” said Changunda.

POSB remains well capitalised with a capital adequacy ratio of 57 percent and 61 percent as of 31 December 2023 and 30 June 2024 respectively.

Representing Mutapa Investment Fund chief executive officer, Dr John Mangudya at the AGM, deputy chief investment officer, Enerst Denhere, commended POSB for a remarkable performance which was recorded in times of a turbulent economic environment.

“POSB has demonstrated remarkable resilience and adaptability. Their financial performance has been strong, with a good net profit, a liquidity ratio of 66 percent, and capital adequacy ratio of 56,57 percent and a low non-performing loan ratio.

“This robust performance is a testament to the hard work and dedication of the entire POSB management team, who consistently prioritise the provision of efficiency and convenience to their customers,” he said.-ebusinessweekly