A defacto central bank, is what the market calls the country’s largest bank, CBZ, where the past two successive Reserve Bank of Zimbabwe (RBZ) governors came from and a third seemed to be en route.
Never Nyemudzo took over as CEO on May 1, 2014 following the elevation of then CEO Dr John Mangudya to become RBZ Governor.
Being at the helm of such a financial institution, home to critical accounts for State institutions and accounting for the lion’s share of loans, comes with its own challenges.
Never Nyemudzo’s unexpected and sudden departure from the bank as CEO earlier this week has left more questions than answers.
Whatever the reasons, it is the complexities of running a key asset, closely watched by many and critical to the economy and the very governance of the country that has snapped his back.
The strategic and sensitive nature of CBZ to the country’s economy makes the chief executive officer live ‘hell on earth.’
To start with, during his reign, Nyemudzo had to navigate the economic sanctions placed on Zimbabwe.
This meant that CBZ had to play the role of sourcing financing from around the world. Some of the funding would come at a premium because of the country risk factor. It also holds the accounts of politically exposed persons (PEPs)
Apart from the debilitating sanctions, Nyemudzo had to deal with a skewed set up within and outside the bank. The politics of the day prevails over basic banking practices.
Within the bank, non-performing loans were a cause for concern when Nyemudzo took over the reins. More importantly, having Government as the major shareholder proved a challenge with management either forced to turn a blind eye on toxic loans and continue pumping more money to rogue borrowers or become a renegade.
Most politicians believe whatever is State-owned should serve them at any cost. And yet on the other hand, there are corporate governance frameworks to be adhered to. This presents a Catch22 situation for the head of the institution. Whereas one must look “loyal and respectful to political authority” there are limitations to what they can do otherwise they may be caught in the wrong when auditors come.
There were also internal dynamics where the bank had to take up certain assignments on behalf of Government, which may not necessarily bring economic value to CBZ. Such assignments normally come at a cost to the bank but are of a strategic nature to the central economy.
This can be exemplified by the amount of Treasury Bills that the bank is now exposed to. As at June, TBs amounted to about $800 million on CBZ books.
The bank had also to take up agro bills among other Government papers and still had its own obligations to run.
Nyemudzo may have stories to tell in another life.
External to the bank, Nyemudzo faced a weakening financial services sector going through a liquidity challenge and cash shortages.
CBZ Holdings is the country’s largest financial services institution by deposits and assets.
But the centrality of CBZ to economic transformation has rendered it more important, requiring to be led by shrewd bosses who can withstand pressure.
The pressure that comes with running a successful institution in which Government is majority owner, at a time when other state institutions are racking huge losses presents its own challenges.
Chief Secretary to the President and Cabinet Dr Misheck Sibanda, this week revealed that most of the audited entities were technically insolvent with 38 out of 93 State-owned enterprises incurring a combined $270 million loss.
Dr Sibanda said what was worrying was the fact that for those 93 entities, 70 percent of them were ‘technically insolvent,’ or ‘illiquid’, and this put added strain on the fiscus.
During Nyemudzo’s three-year reign, the bank’s assets grew to about $2,1 billion as at June 30 this year from about $1,7 billion although the growth is largely skewed towards treasury bills which now amount to about $800 million. It was also during his tenure when market analysts questioned the bank’s loan book more so insider loans with the shared sentiment being that the bank was not disclosing the true state of the loan book given its size.