Treat all borrowers equally, Sampa tells DBZ
By Gift Chanda
Wed 06 June 2012, 13:24 CAT
THE Development Bank of Zambia should treat all borrowers equally, says finance deputy minister Miles Sampa. And Sampa has given the board at DBZ two weeks to find a new managing director to run the bank.
During a familiarisation tour of the bank yesterday, Sampa called for professionalism in the operations of the bank. He said all borrowers, in spite of where they were coming from, should be subjected to the same rules.
"Don't have rules for Mr X and rules for Mr Y; treat all Zambians equally. If 15 years ago a company defaulted, you had your ways of recovering that money, probably you liquidated that company and sold the assets finish; that ended the story," he said.
He said the bank should not be in the "front line of breaking company rules or guidelines of lending."
"If any one of the company owners that defaulted 15 years ago, had signed a personal guarantee for the directors, go back and have those directors taken to court so that you recover the money because they signed a personal guarantee. But if they didn't sign a personal guarantee, please the law does not allow you; don't pursue them," Sampa said.
"Don't create different laws for DBZ."
He urged the bank to ensure that it exercises due diligence before a company borrowed to avoid pointing fingers on other people in an event that the borrower failed to repay the loan.
"If the borrower deserves to be punished by the law and by the term sheet they signed here, pursue it that way. Don't create term sheets in the mind…make sure when you give these loans you take responsibility. Make sure before you give the money out be confident; believe in that particular project. That way, if that project fails; the only people to blame are yourselves. Don't blame government, don't blame politicians; don't blame the borrower. The borrower is coming to get money and they will present the project to the best of their ability and it's up to you to do your due diligence," he explained.
He blamed the past management and board for all the loans that had not been repaid in the last 15 years.
"For the new board, if you find some people gave out non-performing loans discipline them. That is what happens in the commercial world," Sampa said.
He also urged the new management to ensure that politics were kept away from the bank.
"In the name DBZ, I haven't seen anywhere it says politicians or politics, so keep politicians away from here," he said.
"Don't be used by politicians. When you make a bad loan, don't come and say this politician told us to do it…the PF will not tell you what to do or whom to lend to. If we tell you whom to lend to please refuse because if that loan goes bad, it will not be politicians; it will be yourselves to be answerable."
Sampa said the board and management should ensure it takes control of the operations of the bank.
"Get away from the habit of saying, 'it was that minister who told us'. We will tell you, tell us where that minister signed. And we politicians don't sign anywhere," he said.
Meanwhile, Sampa told the DBZ board to quickly find a new managing director to build confidence in the bank.
"I am aware you are trying to find a new MD but please do that with the speed that it deserves. Within the next two weeks, give us a new managing director," he said.
"As government, we do not care who you choose but choose someone professionally."
He also urged both the management and the board to ensure discipline is instilled at the bank.
Sampa noted that DBZ was the only bank in the country notoriously known for leaking internal information to the public.
"It DBZ is the only bank in the country where we have seen grave levels of indiscipline and this is because you have members of staff leaking information out of here. We see it in tabloids and we could even see that certain letters were pulled out from your own files because we could see the holes punched in them," he said.
"We don't want to know your internal correspondence…we want to hear about you when you are issuing a press statement or when you have your financials released. If there is any staff that is found wanting, please discipline them because only when you have discipline in your institution will you create confidence and able to attract funds which in turn you will lend out to the Zambians."
DBZ acting director Darwin Shinde said the bank needed fresh capital injection.
He said since the bank was restructured in 2001, capital going to the bank had been reducing and the bank had not been active in the market.
"Given that background, it is important that the government quickly recapitalises the bank and thereby creates a platform to help the country move forward," he said.
Labels: BANKING, DBZ, MILES SAMPA
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DBZ launches scheme for small enterprises
Written by Chiwoyu Sinyangwe
Friday, August 21, 2009 4:54:22 PM
SMALL businesses entrepreneurs in the country should abandon the legacy of believing that the government owes them a favour, commerce minister Felix Mutati said yesterday.
And Development Bank of Zambia (DBZ) has launched a national Credit Guarantee Scheme (CGS) for micro, Small and Medium Enterprises (MSMEs) expected to grow about US$10 million (about K48 billion) during its life.
The Privte Sector Development Reform Programme (PSDRP) made available the initial amount of US $2.1 million (about K9.6 billion) as seed capital.
During a breakfast launch yesterday, Mutati said there was need for small and medium entrepreneurs (SMEs) in the country to respond responsibly to the financing arrangements that were being tailored for the sector with the help of the government.
Mutati also urged the local entrepreneurs to build the spirit of innovativeness and avoid duplicating already successful enterprises.
“We need to abandon the legacy of believing that you are owed a favour by the government when you get the fund from the government...this legacy must be abandoned,” said Mutati. “We need to research on the business you are undertaking and understand the risks associated, don’t do what your neighbour is doing…we also salute excellence in failure where you put in everything but things just fail.”
And DBZ managing director Dr Abraham Mwenda said CGS would guarantee new MSME credit portfolios of eligible participating financial institutions as opposed to the existing ones.
Dr Mwenda said the maximum coverage rate to be provided under CGS would be 60 per cent and only capital or principle losses would be covered, meaning that participating financial institutions would carry some residual credit risk on their MSME lending portfolios.
He said apart from improving access to finance, CGS was expected to make significant contribution to unlocking the potential of the MSME sector as an engine for private sector based investment and production.
Commercial banks in the country are eligible to participate in the CGS and others have so far showed interest in the facility.
“Eligible loans will range from a minimum of K20 million to maximum limit of K300 million to a single enterprise or group of related enterprises,” said Dr Mwenda. “There will also be limits set for participating financial institutions. Allocation will be on a first come first-served-basis based on eligibility criteria to be communicated to participating financial institutions.”
Labels: DBZ, FELIX MUTATI, SMEs
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DBZ launches fund for IFAD pilot project
Written by Chiwoyu Sinyangwe
Friday, August 07, 2009 2:41:30 PM
DEVELOPMENT Bank of Zambia (DBZ) has launched a US $4 millionInternational Fund for Agriculture Development (IFAD) sponsored pilot project to provide affordable financing to
out-grower contractors of small-scale agricultural producers.
The purpose of the fund is to increase the use of sustainable financial services in rural areas and improve the livelihood of rural households as well as the viability of rural enterprises.
Through the credit facility for contracted small-scale production, the rural finance programme would promote the supply of sustainable financial services to contract farming companies and other bankable organizations that bonded small-scale producers.
During the launch on Wednesday evening, DBZ managing director Dr Abraham Mwenda announced that two banks had signed the lending contract with DBZ while more banks had expressed interest to sign up for the facility.
“Our role as the apex development finance institution is to disburse and manage funds available under the facility to participating financial institutions,” Dr Mwenda said. “The participating financial institutions include commercial banks and non-bank financial institutions, which will or have already signed up for the facility for onward lending to qualifying private contractor agricultural marketing, processing and out-grower companies. The loans will be specifically used to finance seasonal inputs, purchase farm produce and other products from contracted small-scale farm produce and other products from contracted small-scale producers, and small capital investment needs such as ploughs and other farming implements.”
Dr Mwenda said according to the features of the facility, the maximum exposure to a single borrower is US $500,000 or its kwacha equivalent while the maximum amount of funds a participating financial institutions was able to access was US $2 million which would be allocated on a first-come, first-serve basis.
“DBZ will lend to participating financial institutions on a clean basis as these institutions will not be required to provide collateral to access the funds,” said Dr Mwenda. “In setting their lending rates, participating financial institutions will be allowed to factor in the profile of prospective clients. Risk premiums are, however, expected not to make the loans beyond the reach of the ultimate borrowers.”
And agriculture and cooperatives minister Dr Brian Chituwo observed that lack of finance on reliable basis had been identified as one of the key constraints for most Zambian marketing and processing companies to expand their smallholder based contracted production operations.
“So far in Zambia, the availability of such financial services on a continuous basis has been very limited, as commercial banks with their urban orientation have shown marginal interest in rural production-related investment of this type,” said Dr Chituwo when he officiated at the launch of the fund.
Labels: AGRICULTURE, DBZ, IFAD, OUTGROWER SCHEMES
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Zambian Airways probe in problems
Written by Staff Reporters
Monday, May 18, 2009 4:23:48 PM
Police officers investigating the Zambian Airways affairs have now gone for Development Bank of Zambia (DBZ) officials whom they want to charge with abuse of office for allegedly failing to comply with board instructions on Zambian Airways. A police source revealed last week that investigations on Zambian Airways have hit a snag.
“The investigations on Zambian Airways have hit a snag and now we are being forced to even turn our attention to officers within DBZ,” the source said.
“We have looked at the private banks, there is nothing. Any time soon, we will start recording warn and caution statements from DBZ officers for abuse of office. We all know that there is no case but nobody is prepared to come out in the open and say it.
“The officers at DBZ are being accused of not having followed all the loan conditions for Zambian Airways. We have investigated this and found that in fact all the conditions were followed. But it seems the bosses just want to show the higher authorities that they are working.”
The source said they had a problem because this matter was elevated to a very high level before investigations and now they were being forced to try and fill in the gaps.
“The investigations about theft by agent which were handed to the DPP [Director of Public Prosecutions] has also hit a snag,” the source said.
“The DPP has asked us to show the theft by the Zambian Airways directors which we are not able to do. There is panic now in the investigations with some people proposing that we remove Mr Fred M'membe from the case; maybe the DPP will agree to proceed with other directors.”
The source said all this was being done because their bosses did not want to accept that there was no case.
“We have done everything and now we are even being forced to turn against innocent DBZ officers. I do not know where this is going to end. But what is clear is that our investigations have not shown any criminal activities on the part of Zambian Airways directors. This was just a commercial transaction. Other investigative agencies have even lost interest in the matter, leaving us from the police trying to push this on our own. But even we know that there is nothing. And in not so many words, the DPP has told us as much.”
Labels: DBZ, FRED M'MEMBE, THE POST, ZAMBIAN AIRWAYS
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Mujuda dismisses DBZ suit as a legal joke, nonsense
Written by George Chellah
Saturday, May 09, 2009 4:08:33 PM
POST legal counsel Sam Mujuda yesterday dismissed the Development Bank of Zambia (DBZ) legal suit as a legal joke, a nonsense.
Reacting to a legal suit filed by DBZ in the High Court against JCN Holdings Limited, Post Newspapers and Mutembo Nchito as first, second and third defendants respectively, Mujuda, who is also the deputy editor-in-chief and deputy managing director dismissed the legal suit describing it as a desperate suit, by desperate people.
"Today, DBZ is suing us demanding that we buy back shares that they acquired in Zambian Airways. What shares? Let them show the nation the shares they acquired in Zambian Airways. This is what happens when people mix politics with commercial transactions. DBZ have got their legal matrix wrong," Mujuda said.
"The general framework of their statement of claim shows that this was a commercial transaction. Those who may want to understand the Zambian Airways transaction can read the DBZ statement of claim. To start with this is a desperate suit by desperate people. They have failed to come up with any evidence of criminal wrongdoing on our part."
He said the falsity of their claim that The Post had stolen US$ 30 million from state institutions seemed to be haunting them.
"Now they are resorting to civil claims that have no basis at all, at law and even in common sense or logic. Today, they can claim that they are shareholders of Zambian Airways when all along they were accusing us of trying to get DBZ on board as shareholders and they told Parliament that they had refused to do that," Mujuda said.
He said the case against The Post was very simple.
"Anyway, that is how liars behave, they easily forget what they did or said yesterday. Today, they are suing us to buy back shares, which they told Parliament that they never acquired. It's a very simple case for us, we are very happy that they have taken us to court where we will teach them a lesson that it does not pay to lie, to be dishonest or deceitful," Mujuda said.
"This writ does not disclose the cause of action. They wrote to us through their lawyers, demanding that we buy back shares and we replied to them. It seems this writ has not addressed any of the things that we raised in our letter to them."
According to a letter dated March 23, 2009, which was written to DBZ's lawyers by MNB legal practitioners, who are acting for JCN holdings and Post Newspapers in the matter, its client's position in the matter was that any and all documents signed by them and delivered to DBZ were so signed, as evidenced in writing, subject to negotiations between the two sides.
"These negotiations have never been concluded and that is where the matter ended. We note that contrary to the position now being taken by your client, your client's shareholder (s) and/or their agents or representatives have made unequivocal pronouncements in Parliament that they had rejected the offer to convert the debt facility into equity/shares," read the letter in part.
"Our instructions are therefore, as follows; the issue of conversion from debt to shares never proceeded beyond the negotiations that had commenced between your clients and ours. The parties were never ad idem thereon, as the contemporaneous correspondences passing between them, which you no doubt have in your possession, will show. The document you assert constitutes an enforceable share buy-back undertaking was executed subject to negotiations, which negotiations as noted above, have never concluded.
"In any event, even assuming the document you refer to was binding, and our client's position is that it is not, the undertaking referred to at paragraph two of your letter was contingent upon the consideration of conversion of the debt facility to Zambian Airways Limited into shares. Since this has not occurred, that undertaking is wholly unenforceable for lack of consideration."
They further stated that since no conversion of debt into shares took place, there are no shares to buy back.
"Our clients are still open to an amicable resolution of this matter. Should yours decide to institute suit, as they are well entitled to do, you may assume that we are instructed to receive process," stated the letter.
And according to the statement of claim filed in the High Court, the DBZ is claiming a sum of K14 billion.
The plaintiff is also claiming interest at the contractual rate.
"In the alternative, for an order that Mr Mutembo Nchito executes a guarantee or be deemed to have executed the guarantee under clause 8.6 of the Syndication Loan Agreement," stated DBZ's claim in part.
The DBZ is further demanding that Nchito pay the sum of US$ 3.0 million under the Personal Guarantee.
"Such order as the court may deem just and equitable," stated the claim.
They are also claiming costs of the action.
And the background of the case filed in the High Court states that, desirous of expanding its operations, by inter alia, the acquisition of new equipment, Zambian Airways in or about 2007 approached Investrust to syndicate a loan facility in favour of the company aforesaid in the sum of US$ 5.5 million, [the loan] to be secured against certain assets of the company.
"Investrust then as the lead bank put together a consortium of banks comprising itself, Intermarket and the plaintiff who together as joint lenders ("the lenders") agreed to provide banking facilities up to the said sum to be secured by; a fixed debenture of two Boeing aircraft registration No. 9CJ JCN and 9CJ JOY, subordination of shareholders loans to the lenders, assignment of receivables duly executed, personal guarantee of Mr Mutembo Nchito for the full value of US$ 5,5 million and Key Man Insurance of the key promoter Mr Mutembo Nchito for the period provided for in the various offer letters from the banks party to the transaction," they stated.
They further stated that the plaintiff's portion of the loan was US$ 3.0 million then equivalent to K14 billion, which sum was duly drawn and utilised by the company.
"The full terms and conditions are contained in the syndication loan agreement signed by the company and the lenders, including the plaintiff on the 3rd November 2007. The lenders agreed to share pari passu the securities referred to in paragraph 10 hereof and/or as in the security sharing agreement executed by the lenders and the company. By mid 2008, it was clear that in spite of the injection of US$ 5.5 million into the company, the said company was facing serious liquidity problems and was in arrears in the repayment of both interest and principal on the sum advanced to it by the plaintiff," read the statement in part. "By clause 8.6 of the syndication loan agreement executed by the plaintiff on the 3rd November, 2007, Mr Mutembo Nchito was to give a personal guarantee for the repayment of the loan facility for the full value of US$ 5,5000,000-00. Mr Mutembo Nchito executed the said syndication loan agreement on behalf of the company but he did not and until now has not executed the personal guarantee envisaged under the agreement aforesaid. By reason of Mr Mutembo Nchito's failure to execute the guarantee as hereinbefore pleaded, the plaintiff suffered a dimunition in the security offered by the company for the due repayment of the loan, and the plaintiff is entitled to call upon Mr Mutembo Nchito to execute the guarantee as agreed by the parties."
They also stated that at the request of the company and in light of the company's failure to meet its debt obligations and to avert its liquidation, the plaintiff agreed to participate in the restructuring of the capital of the company, in consideration of the defendants executing an equity buy-back guarantee in favour of the plaintiff.
"The restructuring referred to in the above paragraph was necessary and a condition precedent to the company accessing further loans from Finance Bank to fund working capital for the company. The capital restructuring agreed to included: that the plaintiff converts its portion of the loan to the company into common stock equity in the said company, that the said common stock equity was in the sum of K14 billion redeemable at the plaintiff's discretion in with interest calculated at the current 182 Government of the Republic of Zambia treasury bill rate (at the material time at 16 per cent per annum) plus eight per cent margin or a floor rate of 20 per cent per annum, whichever is higher," they stated. "That the first and second defendants would jointly and/or severally guarantee the repayment to the plaintiff of the sums referred to in paragraph 19.2 in any of the circumstances referred to in the offer letter dated 6th October 2008, that the plaintiff would in consideration of Finance Bank lending the company the sum of US$ 3.0 million relinquish its interest in securities referred to in paragraph 10 hereof in favour of Finance Bank. The plaintiff did relinquish their interest in the securities and Finance Bank did avail the company banking facilities in the sum of US$ 3.0 million, which the company drew and utilised.
"In consideration of and as a condition precedent to the plaintiff converting its loan to the company into common stock equity as aforesaid, and the plaintiff relinquishing its interests in the securities in favour of Finance Bank to enable the said Finance Bank lend US$ 3 million to the company, the first and second defendants executed an irrevocable undertaking to buy back the common stock equity referred to in paragraph 19 hereof."
They stated that: "The equity buy-back guarantee executed or signed severally by the first and second defendants and dated 13th October 2008 provided that the defendants jointly and severally; in consideration of the plaintiff's "Conversion of a debt facility, amounting to K14 billion plus interest calculated at the 182 GRZ treasury bill rate plus eight per cent margin or a floor rate of 20 per cent annum, whichever is higher. Hereby irrevocably undertake to buy back the said equity from the bank as may be determined in accordance with the terms of the shareholders agreement. In the event that the shareholders agreement is not executed the buy back will be determined by the bank. Further undertake to hold this undertaking valid and legally binding on ourselves until the execution of the irrevocable joint and several share buy-back guarantee by all the shareholders of the Zambian Airways. Also undertake to buy-back the equity from the bank on demand upon presentation of reasonable notice from the bank to do so."
They also stated that on or about January 10th 2009, the company and Zambian Airways Limited informed the lenders that their board had resolved to suspend the operations of the company.
"By a letter dated 13th January 2009 the plaintiff, considering the suspension of operations an event of default, made a demand for payment by the defendants in terms of the agreement evidenced by the defendants' letter of the 13th October 2008, referred to in paragraph 18 hereon. The first and second defendants have failed to make payment of the sum demanded or any sum at all," they stated.
"The plaintiff is entitled to and claims payment of the sum of K14 billion plus interest calculated at the 182 GRZ treasury bill rate currently at 16 per cent per annum plus eight per cent margin or a floor rate of 20 per cent per annum whichever is higher from the date of the disbursement of the loan and under the terms of the guarantee."
Labels: DBZ, SAM MUJUDA, THE POST, ZAMBIAN AIRWAYS
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Govt to remove bureaucracy - Musokotwane
December 22, 2008
Finance and National Planning Minister, Situmbeko Musokotwane said the Government would encourage private sector participation by removing bureaucracy and making it easy for people to start doing business.
Private Sector Development Association (PSDA) chairperson, Yusuf Dodia urged the Government to avoid borrowing from banks next year so as not to create more pressure on the financial sector.
Mr Dodia said the Citizens Economic Empowerment Commission (CEEC) and the Development Bank of Zambia (DBZ) should be merged so that they could assist Zambians in starting up businesses.
Another businessman, Jeremiah Dauya said the Government should give local businesses incentives to enable their products to compete with imported items.
Meanwhile Dr. Musokotwane said donors have pledged to fulfill their budgetary commitments in next year’s Budget despite the global financial crisis.
Dr Musokotwane said on the Zambia National Broadcasting Corporation (ZNBC) television programme, “National Watch” monitored yesterday that donors contributed 25 per cent of Zambia’s national Budget.
He said that because of the global crisis there were fears that donor countries who were most affected would cut their support but most of them had confirmed their contribution.
“So far most donors have indicated that they will fulfill their pledges and the only worry will be about the job losses in the mines,” he said.
He said Zambia should not be scared to attract foreign investment because it accounted for the positive economic trends in countries such as China and Thailand.
“We should not be scared to attract local and foreign investment but we should just ensure that people benefit,” he said.
He said Zambia had not attracted sufficient foreign investment, especially that it came from a “commandist” economy and that since it had a small market the option was to export in order to earn foreign exchange.
He added that Zambia was not the only country that was facing job losses in the mines and the Government was monitoring mines while looking at measures of protecting jobs.
Dr Musokotwane said President Banda recently visited Luanshya Mine because the Government was concerned about the job losses.
He also assured that next year’s Budget would address how Zambia would pull through out of the global financial crisis.
Times of Zambia
Labels: CEEC, DBZ, DEREGULATION, PSDA, RED TAPE, SITUMBEKO MUSOKOTWANE, YUSUF DODIA
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Richard's road to success
By Amos Malupenga
Sunday March 09, 2008 [03:00]
There is no short cut to success, advises Intermarket Banking Corporation managing director Richard Phiri. Richard, a Chartered Accountant by profession and has served in various high positions in a number of banks in the country, including acting as Development Bank of Zambia managing director last year, says those who succeed in life are disciplined and always do the right things.
“My experience is that for you to get noticed, you have to do the correct things in life,” advises 38-year-old Richard. “There is no short cut. If it is work, commit and dedicate yourself, do everything with the right intentions; mix with the right people and complete your tasks on time. Gain the confidence of your employers and supervisors; then the sky shall be the limit.”
Richard says above all, those who wish to succeed anything should heavily invest in their integrity because it is the biggest asset that one can have for himself or herself. He says in his banking career, he has never been involved in any fraudulent activity, which can otherwise easily dent one's career.
Question: The first question is: who is Richard Phiri?
Answer: Richard Phiri is one young man born on the 11th of October in 1970 in Mufulira. I was born from a family of seven, six boys and one girl. I am the third-born. My father was a miner in Mufulira. He worked for the mines for a long time up to the time he retired at the age of 55 in 1995.
I did my primary and secondary schools in Mufulira. The schools I went to for primary were Mutamba and Chankwa before I qualified to go to Butondo Secondary School, where I completed my grade twelve in 1988.
In terms of my career planning, I always intended to be an accountant right from school. I had special interest in additional mathematics, general mathematics, principles of accounts and English. So I had an inclination towards the business world because my intention was to become an accountant.
And that is what happened when I completed school. I decided to go full time in the accountancy arena. Initially, I was selected to go to study education at the University of Zambia (UNZA). But because my plan was very different, and because I was not picked to go to the Copperbelt University where I had earlier intended to go, I thought I needed to pursue other options.
So as I was reluctantly waiting to report to UNZA, I had met a certain gentleman, a Sri-Lankan guy at ZCCM Mufulira Division who was the divisional management accountant at the time. He was interested in picking up some young people, though on a part-time basis, with a view to sponsoring them to study accountancy.
I spoke with him and he was very interested to pick on me and a few other people to do some job on a part-time basis in the accounts department as they were making arrangements to sponsor us for training. So we did the accounting job for a few months on a part-time basis. After a few months, it was agreed that we would join the ZCCM accountancy training in Chingola.
So I started my accountancy training at the Chingola School of Accountancy. I finished my AAT in 1993 and pursued ACCA which I finished in December 1995. That was my full accountancy training.
Naturally, after that training I had to go back to ZCCM to work because they had put in money in our training. I worked for ZCCM not for long. I worked from January 1996 to April the same year when I decided to leave ZCCM. The job I was doing at the time I was leaving was that of departmental cost accountant in the concentrator department.
But I must say that during the time I was at school, every time we were on break, I would get back to the division to do some work. So I had a lot of experience. Basically, all my accounting experience is from ZCCM.
Q: Four months! Was this enough for you to pay back what ZCCM had put into your training?
A: It wasn’t enough. In fact, I was one of those few lucky people. We had a bonding arrangement. It was required that one would put in a number of years equivalent to the number of training years. But we finished training at the time ZCCM was going through some difficulties. And secondly, we were still doing some work for the division every time we were on break.
So it was not as though we were coming straight from university. I think that was considered.
The bonding enforcement was a little difficult at the time. I think the policy ZCCM was also pursuing at the time was to train for the wider economy, which is why you will see that most of the accountants in this market, particularly the senior accountants, came through the ZCCM accountancy training.
To that extent, I owe it all to ZCCM for both the training and accounting experience I received.
Q: What happened after you left ZCCM?
A: I came to work for the Securities and Exchanges Commission (SEC) here in Lusaka. I joined as accountant, reporting to the director of finance and securities registration. I worked with SEC up to November 1997 when I had an opportunity to work for Stanbic Bank.
I was given an offer to join Stanbic Bank leasing division as a leasing specialist. Although I was involved in capital markets at SEC in terms of appraising companies that were coming on board for listing at the Lusaka Stock Exchange, I felt that there would be bigger challenges in the financial services sector because that is where my interests lay. So I decided that the move to Stanbic was going to be the most important move and then leap into the financial services world where I thought I could ply my trade.
I must say that my experience at Stanbic was an eye opener for me in as far as financial services were concerned. We did a lot of complex deals. I was in what we used to call Stanbic Leasing, initially, which was later converted to Stanbic Financial Services Zambia Limited. It was a hundred per cent subsidiary of Stanbic Bank although we were in the same building at Woodgate House for all intent and purposes.
I worked there and eventually I was finance and credit officer, which was basically a chief financial officer job for the Financial Services company. My job mainly was structuring of leasing deals, pricing and structured finance.
I also did general credit administration. I think I did that job very well and I left a good mark, as far as I am concerned. I worked for Stanbic up to December 2000 when there was yet another opportunity for me to work for Citi Bank Zambia Limited.
In Citi Bank, the job that was offered to me initially was that of relationship manager in charge of large corporate and multinational companies; what we used to call group relationship names such as BP, Caltex etc. That was my portfolio.
The difference between the Citi Bank and Stanbic job was that in Stanbic, while I was doing relationship management, it was more on the credit side. In Citi Bank, I was doing both relationship management and credit on the assets side while I was also involved on the liability mobilisation side. It was a wider job which gave me an increased scope and I felt that it was a good opportunity at the time.
After working as relationship manager for two years in Citi Bank, I was elevated to resident vice-president in the same unit. I worked for another two years when I saw another challenge in the market. I felt I had enough experience and I was a little more confident. I felt that I needed to move on in my career.
So I accepted a job offer at Investrust Bank as director of credit and corporate finance. I moved into that job and the challenge was that that job was much higher level. And being a local institution, decision making was local and that was the advantage we had together with our customers because all the decisions would basically be taken within the same building.
There was no decision that was referred outside the country as was the case in my previous two jobs. So those limitations were eliminated.
The other thing I liked about Investrust Bank was that the managing director gave each one of us the heads of department a lot of opportunity to make decisions and be accountable. For me, that was a positive move. It meant that one needed to apply themselves to ensure that whatever decisions were taken were sound enough.
Also, that was my first job to have been involved at board level in terms of actual presentations and be able to take questions on all matters relating to my department. I cherish that exposure up to today. To a large extent, it has led to what I am today.
And as I was doing my job at Investrust Bank, I saw an advert in the newspapers from Development Bank of Zambia (DBZ) where they were looking for a director of credit and portfolio management.
I looked at it and the profile, and I found myself fitting in squarely and I thought the institution was high level. The job itself was very critical to the institution. It was basically the core business of the bank.
I applied for that job and I was called for the interview.
Fortunately, I was the preferred candidate among the many candidates that were interviewed. That obviously meant a minor shift from the normal commercial banking I was doing to development finance, which I thought was going to help me diversify my knowledge because the three banks I had worked for had basically exposed me to commercial banking although in different setups as in financial services, general relationship management and then corporate finance and credit. So I thought that I was satisfied to a large extent; not perfect but complete in terms of what I wanted to achieve.
The DBZ job gave me a new dimension. I joined DBZ in May 2006 after having joined Investrust in October 2004. I joined DBZ as director of credit and portfolio management. It was very good. I met people from the development financial institutions world (DFI). That is when I got to start knowing all these important multilateral, international and regional development financial institutions. The level of contact there was quite high.
In December 2006, my boss then, Dr Bwalya Ng’andu, left the bank and I was asked by the government in January 2007 through the Ministry of Finance to act as managing director. The appointment was actually from the President. There were issues that were supposed to be handled constitutionally.
So it was basically the President appointing me through the Ministry of Finance. I received formal communication and that is how I worked as acting managing director from January 2007 up to the time I left in October the same year.
Now, how I left! Obviously, everyone wants to grow and look at opportunities as they come and see whether it is worth taking advantage of this potentially value-adding opportunity. There was a job of managing director that fell vacant here at Intermarket Banking Corporation. KPMG were tasked to head-hunt.
So I was basically head-hunted through KPMG. They asked for my CV and I gave it out. I was called for the first interview, then I was called for the second and final interview. Eventually, I was communicated to that I was the preferred candidate for the job as managing director.
The reason why this was more exciting was that it was a definite appointment and I was coming here as managing director. On the other side, it was not clear what the direction would be like. So like everyone else with ambition, I decided to move.
When I was told about this place, they were very clear in the interview. They informed me that the institution had actually suffered some stress operationally and they required somebody who was going to hit the ground running; get in and immediately start resolving issues and challenges that the bank faced at the time. The issues and challenges are still there to some extent but I think we have worked on most of them.
For me, this came as a very challenging opportunity and I am enjoying my stay.
Q: Before I ask you to talk about the challenges at Intermarket, let me briefly take you back to DBZ. I recall that during the time you joined Intermarket as managing director, DBZ had also advertised the same position of managing director.
Since you were acting in that position, didn’t you see it fit to apply so you could become the MD?
A: To be very honest, I didn’t see it as an opportunity coming my way.
Q: Why not, since you had acted in that position for several months?
A: At the time the job was being advertised, I had already been enticed into this job. So I was weighing the options. I was very close to both. But what I concluded was that this job here was more for me than the other job at DBZ.
Q: Did you have an idea as to what sort applicants there were for the DBZ job?
A: No.
Q: Or is it that you avoided competition at DBZ?
A: No. I didn’t even know who was in contention. And you will remember that the DBZ job was filled months after I had left. Even the time they were doing the interviews, I had already moved here.
In actual fact, I was approached for this job much earlier in the year. There was a period of about three to four months from the period we started talking up to the time that I actually moved.
Q: Before we discuss the challenges at Intermarket, I just want to take you back to your secondary school days. I remember you were in grade twelve and I was in junior secondary when you came to our school Kantanshi Secondary for debate. There was debate between Butondo Secondary School and Kantanshi. You debated so eloquently and used big words. We all cheered you and I think you were voted best debater of the day. I am just wondering; what has now happened to your debating skills?
A: That’s a very good question. I agree that during my days…in the first place, it wasn’t just about debate. Even in terms of class performance, I was an A plus student. In terms of extra-curriculum activities, debate was like my thing. I remember that I was once champion for the whole district, I was chairman of the district debating society, I was chairman of the Butondo Public Speaking and Debating Society.
I was also chairman of the UNIP youth league at the school, so I was an activist.
I remember during those debating days they used to call me the fluent machine. The other name which was referred to me was ‘the moving encyclopaedia’. I haven’t given upon that aspect. Now in my days, I still do a lot of public speaking. I do teach in various functions including the Church.
I help in teaching in the various church activities in our church and elsewhere, if invited. Lately, most church organisations invite me to talk about business so that I can combine my spiritual background with the business one. That goes well with the church especially that we all talk about prosperity. In most churches now, prosperity teachings have taken centre stage.
Basically, people have realised that Christians are not meant to be poor, they are also meant to progress. In fact, they are meant to progress even more. So I have always given myself to those services, to teach on a particular subject emanating from the word of God then I would bring in business concepts, business management etc.
And as a chief executive now, I am expected to be a good orator because all the time I am talking to members of staff; we are making a business presentation. So I still carry on those skills.
Q: An example of how you execute such an assignment in Church?
A: I don’t do it like a sermon, as such. But if I am teaching on business, it is usually during church seminars, prosperity seminars or whatever they would want to call it.
So I would talk about how to raise money, how to manage your finances on a day-to-day basis, how to keep your books of accounts and so on. I have done several presentations in that area.
I remember sometime last year, I was speaking at a seminar in Kitwe which was organised by Maranatha Men’s Fellowship.
It was all about prosperity. There were various speakers and they asked me to talk about how to access finance and how to prepare a bankable business plan.
So I took them through the motion as to why you would want to state the shareholding, why you need to diversify your shareholding and not hundred per cent share ownership, the way the bank looks at shareholding. If it is a family business, the risk is higher than if the shareholding is diversified; how you structure your collateral for borrowing purposes, how you prepare your cash flows in order to make them appealing to a bank manager and how you can develop a relationship with your bank manager.
It’s a talk in that line and people would then be allowed to ask questions. I still do that and therefore I still practice my public speaking skills.
Q: That’s good. Could you now talk about the challenges that you found at Intermarket?
A: It’s just general. I have learnt over time that every bank has its own challenges, mostly to do with operations.
So it is just some operational failures which have been rectified. There were also other issues to do with the general market perception. Up to now, some people think Intermarket is still a discount house; that it’s not a bank. But our message going forward is that we are a commercial bank like any other and we offer the services that you can find at Barclays or Stanchart or indeed any other commercial bank.
There were also issues of market feasibility to an extent that the organisation suffered from its own failures. But these challenges are not insurmountable and I think that I am equal to the challenge.
We have a very young team at the bank, which requires a lot of patience, a bit more time to mature. I am very sure that one day soon, we are going to shock this market. We are doing lots of positive things; we are taking advantage of the opportunities that are existing in the wider economy as well as in the banking sector. So in short, it is normal business challenges that you would face in any organisation, not only in the bank.
Q: Intermarket is not an indigenous bank…
A: It is not an indigenous bank. It is owned 98 per cent by Intermarket Holdings of Zimbabwe, which is owned 84 per cent by ZB Financial Holdings of Zimbabwe. ZB Financial Holdings is probably the largest financial services in Zimbabwe.
It’s got various companies that operate under that umbrella. Intermarket Banking Corporation of Zambia is one of such. There is also ZB Bank. If you are in Harare, you will see a lot of those buildings. Then you have ZB Life, there is ZB Reassurance, ZB Insurance, ZB Asset Management, ZB Building Society which is still called Intermarket Building Society.
So it is a diverse group and we think that we belong to a very solid financial services group. We can only leverage on that to champion our own growth although at the moment we are the smallest commercial bank in Zambia in terms of total assets. But we think that with the strategies we have starting this year, increasing our loan book, our capital and our product offerings, we are very sure that five years from now, we will be a very different bank.
At the moment, we also have a hundred per cent subsidiary which is Intermarket Securities Limited which is basically in stock broking and management, fund management, financial advisories, unit trust which is like collective investment scheme and so on. Those are done through the subsidiary. The bank is intact as a commercial bank where we do general banking services.
Q: Do you report to Harare or you can make your own decisions here in Lusaka?
A: For policy matters, I report to the board of directors; there is a boardroom just behind my office. For operational matters, I report to the group chief executive officer. All policy decisions are made at board level and if I am contacting the group chief executive, it is just to see how we can take advantage of the various synergies between the group and the Zambian operation.
There are a lot of things that are happening in Zimbabwe. In fact, the financial services sector in Zimbabwe is far more advanced than the Zambian financial services sector.
Q: With all the economic problems we are hearing about Zimbabwe?
A: Yes! The group is still performing well despite the economic problems.
Q: One would think that we are negatively affected by what is happening in Zimbabwe?
A: No, we are not. Not even by a cent. The market in Zimbabwe is actually wider and more sophisticated than this market here. So we have a lot to learn. In fact, we benefit a lot in terms of skills and knowledge transfer. Now we are talking about technology, product development and all these initiatives that we have put on our tables. There is a lot that we have to learn from the Zimbabwean market. To that extent, I am constantly in touch with the group chief executive.
Q: From your experience in the various financial institutions, how do you see the development of the Zambian economy?
A: The Zambian economy has been consistently doing well in the last four or five years. Growing at an average of five per cent per annum is no small achievement. I think that what we need to focus on now after achieving macro-economic stability is growth particularly with inflation having gone down in the last three years, interest rates have been continually falling, we have a constantly growing employment base through creation of various industries, new investments are coming up on the mines etc, so one would expect that the peripheral industry will also benefit in terms of suppliers and contractors.
To that extent, the Zambian economy is being looked at by every investor out there as a model, as a gem. And everyone wants to come and put their money here. I talk to a lot of people who come to Zambia to look for business prospects. And you can only read from that; if outsiders are seeing all these opportunities, it’s an indication that someone sitting out there in America and the UK are seeing something positive in Zambia.
The only issues remaining to be resolved are issues of unemployment and poverty which are still very high. They can only go down over time. Poverty is linked to unemployment but we look at it as an isolated problem. Poverty levels are still very high and I think that deliberate interventions can do.
The advent of the Citizens Economic Empowerment (CEE) Act has also given opportunities for Zambians to begin looking at investment opportunities. For a long time, this country has been training people who are fit to go and work for other organisations. What the Act is beginning to project to Zambians is that they can also have the opportunity to become employers, start setting up companies.
There are various incentives there and one issue I would like to talk about is the success of these special funds being created. Historically in Zambia, we have had failures in every project or fund that had been administered by a government ministry or department. We are talking about the youth fund, tourism fund and irrigation fund, among others. All that money has just been going down the drain. It has been like a donation from the government.
The Citizens Economic Empowerment secretariat should learn from those mistakes and ensure that all such funds that will be created via an Economic Empowerment Commission Act should be administered by banks or a competent financial institution which can lend this money on merit. That is the only way government can be assured of getting back this money with a view to reinvesting it in newer projects in future. Then we will be able to see this multiplier effect taking its toll.
The other issue I have advocated, when you are talking about economic empowerment, I know you are not just talking about loans, you are also talking about empowerment through knowledge. The Economic Empowerment Commission should go out and set up deliberate programmes of raining people on how to run business.
Other than just give out a loan to a group of youths in Kanyama, you are better off putting them in class for six months, hire a consultant to take them through all this and have a feedback mechanism after you have given them the money. These programmes should be done on a large scale countrywide. That way we will begin to see these benefits getting down to the people.
The third aspect is that we should consider setting up part of whatever fund we will be creating under the Act as an equity fund, like venture capital fund, where Zambians can access capital to effectively partner up with outside companies. You know, Amos, there is no need for anyone to tell you to take advantage of the partnership opportunities with foreigners. If a foreigner is coming here with US $10 million and you don’t even have US $100,000 in your account, what percentage does that amount to? Zero point zero one per cent? And if you are a 0.01 per cent shareholder, that cannot be partnership.
You are just one minority shareholder, probably being used to get an investment licence and later being dumped.
If you to achieve meaningful partnerships, we want a situation where a Zambian has access to US $5 million and a foreigner has got US $5 million. Then you can say ‘let’s create a partnership’. For me, that’s more meaningful. That should be facilitated via an equity fund where you set up a venture capital fund and be able to loan this money to Zambians with bankable projects provided they have already identified the equity partner from outside the country. The fund is approved and the money is paid directly as shares into this business, of course with a provision for exit. Once this money has grown, venture capital can exit and leave the Zambian and the foreign partner to run the business. For me, this is the way we are going to achieve our objective.
Q: Looking at your age, you have achieved quite a lot professionally. To what do you attribute this quick rise in your profession?
A: Throughout my life, I have been an achiever and a fighter. You and I will agree that we both come from a humble background. My father was an ordinary miner. Apart from my parents taking me to school, which I really appreciate for those great people – may their souls rest in peace – it’s been the drive to try and surpass my parents’standard of living. My father was telling me that ‘the only way I would die a happy person is to see you do better than I have done’. He said ‘I went to school and reached this level, I have ended up as a miner’. He said ‘this is how far I went and the reason why I am working so hard is for you to do better than I did so I can come and drink water in your house and be able to tell people that, that is my son’.
I have also set the same standards for my children. My first-born daughter is doing grade ten at Banani International Secondary School. She is very brilliant. All my children are very brilliant in school because I have set very high standards for them. I have told them ‘look, I have gone as far as I have reached. First of all I qualified as a chartered accountant and I have gone further to do an MBA’. I have an MBA from Oxford Brooks University in the UK. So I have told my daughter that the least she can do is do an MBA. Ideally, she should be focussing on PhD. And that is true for all my children.
And just getting back to what motivates me to achieve; the drive to achieve is really the springboard for anything you want to do in life. You must know what you want to become. Right from school, I wanted to be an accountant and I am an accountant. For me that was a starting point. When I became an accountant, I said to myself ‘what next?’ I did all these accounting jobs and I said to myself ‘I need a challenge. I can’t just be doing this throughout my life’. So I moved into the capital markets and eventually into the financial markets.
In the financial markets, the goal I set out for myself was to…And I have been joking with colleagues saying ‘people say that life begins at 40, so can we define what life is?’
I have always said that for me ‘life is when I will become chief executive officer of a bank’. I was working in the bank and I was eyeing people who were already chief executives. Obviously, all the time I took them as my mentors and icons. I asked myself how I could reach where they had reached.
Then I started working at it and I knew the only way was for me to be committed to what I was doing.
Throughout my working life I have been a very committed employee. I leave everything else for half past five and beyond. During working hours, I commit all the working hours to the job that has been set for me. Secondly, I take an interest to learn and I enjoy learning. Anything I don’t know, I want to know. That’s my drive on a daily basis.
Then I sit with people who have similar ambitions with me. Those are my types of friends, those that I discuss progress with on a daily basis. I also have certain mentors in my life that I look up to and measure myself up to their standards and say to them ‘I want to be like you one day.’
I don’t hide that. I have worked with a number of senior people, senior bankers in this market; Mr Larry Kalala who is now the managing director at Stanbic Bank, I have worked with Mr Jordan Soko, I have worked with Mr Friday Ndhlovu at Investrust Bank, I worked with Dr Bwalya Ng’andu at DBZ; these are excellent professionals. I look up to them and say ‘I would like to be like them’.
I know that I am not yet there but I am definitely on the way. One thing I am happy with is that I have been achieving all my short-term objectives.
When I say ‘I want to become this in the next five years’, I will become just that. But that doesn’t come for free. It’s not like a wish or a prayer. It’s something that one has to work on. Discipline is another factor. It is very important.
Most importantly, I have learnt to protect the most important asset in my life, which is integrity. A lot of people in this market lack integrity and this is common among young people. Throughout my banking career, I have never been involved in fraud and I pride myself in that. I have always been straight in everything I have done and I would like to keep that record. This is obviously noticed in the market. I get a lot of people who compliment me for that. Even as an individual, I am very disciplined. I mix with the right people and always take time to think and strategise and plan.
As I speak to you, I already know what I want to do in the next five to six years. I live on short-tem, medium-term and long-term objectives.
Q: So what would you like to do in the next five years?
A: My dream, my biggest dream in life, is to set up my own bank. Obviously, the challenge is to identify a group of partners that share in my dream and think in the same way I think because I am very aggressive and I run. When I say I want to do this, then I will go all the way. That is the spirit I build even among the people I work with.
To my staff in the bank, for instance, my message has always been that ‘we should all believe in the two plus two is equal to five effect’ because an organisation is made up of people. For an organisation or company to be successful or to have ambition, it must be a collection of different employees with ambitions.
When you put them together, that is what you call an organisation and the total picture is always explosive. It is more than the sum of the individual parts. I always tell people that if I have ten people who are as committed as I am in the bank, we can do so much for this organisation. It’s like learning; if you want to call yourselves a learning organisation, in terms of management theory, you must have individuals you have employed, who are also learning individuals. Everyone must be willing to learn and the total picture is a learning organisation.
So I believe that I can work with people with a very strong drive and desire to set up a financial institution, locally owned but with lots of vibrancy.
Q: You and I are come from humble backgrounds in Mufulira where at one time we were neighbours, what message do you have for the school-going boys and girls in Mufulira, in particular, and the country generally?
A: My message to the young people, especially, is that opportunities are actually availed to all, regardless of tribe, race, location, age and all. So wherever you are, you are still able to make it provided you believe in yourself. Just say to yourself, ‘this is what I want to become’ and give yourself a task of finding out from people what it takes to become what you want to become, and start working on those techniques.
If you are in school, the initial desire for you is to excel and achieve with flying colours. That’s the starting point. Once you have got your grade twelve certificate sorted out, then it is very easy for you to do anything else in this world. So I would urge people just to believe in themselves.
I felt this in my young days in Mufulira. I think, Amos, you will agree with me that almost everyone in Mufulira was saying things were only happening in Lusaka. So we have a few of our colleagues who burnt their fingers because immediately after grade twelve, they rushed to Lusaka to look for jobs. Some of them were working in service stations while others worked in shops in Kamwala and when they came back to Mufulira, they would deceive everyone because they would come in expensive jeans and shoes. So those who were there felt like we were wasting our time.
I just want to encourage everyone that wherever you are, the opportunity is actually waiting for you. The most important thing is for you to chart your course in terms of what you want to become. After you have done that, your careers masters in school will tell that ‘if you want to become a doctor, work on your biology, maths, chemistry and so on’.
Once you have achieved that, you will go into college or university and pursue the right course. But most importantly, it is the discipline and desire to achieve. For me, these two will drive one’s ambition. Even when you want to become head of state, you have to have the ambition and work towards it.
Q: Incidentally, the current head of state was born in Mufulira and he did part of his primary school there…
A: Oh, so lots of good things come from Mufulira.
Q: In conclusion, could you talk about your family?
A: I am married to Rachael Kunda Phiri. She is a nurse by profession. She works as sister-in-charge at Victoria Hospital in Longacres. We have three children. We have been married since September 1993.
My first-born daughter is turning 14 in June. She is doing grade ten at Banani International Secondary School. The other two are also girls. One is ten, another is seven. They are doing grade five and two respectively at Rhodes Park School.
Q: Your last words?
A: Just to encourage young people, once again, to work hard in their careers. When I say young people, I am referring to those that are still in school and those that are already in employment and have reached a level of despair or desperation where they now think it is the end of their career and they will never reach certain levels.
My experience is that for you to get noticed, you have to do the correct things in life. There is no short cut. If it is work, commit and dedicate yourself, do everything with the right intentions; mix with the right people and complete your tasks on time. Gain the confidence of your employers and supervisors; then the sky shall be the limit.
Q: Thank you so much for your time and congratulations on your new appointment.
A: Thank you very much, Amos.
Labels: DBZ, PROFILE, RICHARD PHIRI
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DBZ disburses over K135bn in loans
By Fridah Zinyama
Wednesday October 24, 2007 [04:00]
DEVELOPMENT Bank of Zambia (DBZ) has disbursed more than K135 billion in loans to various sectors of the country’s economy. According to DBZ marketing manager Ackim Mwale, the loans have been given to sectors such as agriculture and agro-processing, construction, financial services, manufacturing, transport and tourism, with the most significant portion going to manufacturing and transport.
“Part of the funds which have been in kwacha and dollar have been drawn from the US$10 million credit facility obtained from the Development Bank of South Africa (DBSA) while the bulk of the kwacha denominated loans have been financed by the proceeds from the DBZ bond issue that the bank listed early this year,” he said.
Mwale explained that the first tranche of the bond raised K68 billion, of which K48.3 billion had so far been disbursed in loans.
He said the balance would be released in the next one month.
“This finance has been provided through our products and instruments that include project finance, working capital finance, trade finance, lease finance and contingent liability instruments,” he said.
Mwale said the bank’s products could be short term, medium term or long term but that the short-medium term facilities normally covered repayment period of no more than three years with a minimum loan amount of between US$20,000 and US$50,000 or kwacha equivalent.
“Other services available at DBZ include Fund management and business advisory. The bank’s approach to business is premised on the need for tailor made client solutions which entails innovation, pro-activity and new ways of creating value for our business such as target marketing and cross selling,” he said.
Mwale said DBZ was also building a portfolio around the Small and Medium Enterprises (SMEs) sector.
Labels: AGRICULTURE, DBZ, SMEs
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