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Saturday, 4 October 2008

ZANACO : a successful privatisation story ?

These are interesting times for Zambia National Commercial Bank (ZANACO), majority-owned by the government, with 49 percent held by Rabobank with management control and 0.2 percent is held by minority shareholders. Earlier this week it annouced the intention to float on the Lusaka Stock Exchange on Nov 17, and hopes to raise 119 billion kwacha ($25.78 million). After the IPO, Rabobank will keep its stake and management control. The Zambian government will reduce its interest to 25 percent and the Zambian public will own a 26 percent stake. Developments like these are leading many to hail ZANACO as one of the success stories of Zambia's privatisation process. An article in Executive Issues (October Edition) makes this very case :

‘The people’s bank”, Zambia National Commercial Bank or ZANACO, has be-come one of the good examples of a well-thought out privatization. Its sale was controversial and anti-privatization campaigners opposed the deal for fear of job losses and the closure of unproftable rural branches. But within a year after partial privatization, good news seems to be the only thing coming out of ZANACO – Thanks to Netherlands Rabo Bank, which has kept its word. “The new management has not sacked anyone as earlier anticipated. It has been a good privatization,” admits Cephas Mukuka , President of the Zambia Union of Financial and Allied Workers (ZUFIAW). The bank intends to issue an Initial Public Offer (IPO) of 25.8 percent shares on the Lusaka Stock Exchange while the Zambia National Farmers Union (ZNFU) has been offered a separate set of shares in the bank. Members of staff in ZANACO will be given an op-portunity to buy a stake under the Employee Share Ownership Program.

A year after Rabo Bank of Netherlands bought 49 percent stake in the once state-owned commercial bank, the balance sheet has grown tremendously . And so have the products! Managing Director Mark Wiessing had reasons to wear a smile when he delivered a speech at the signing ceremony of a US$ 25 million senior debt facility, which has been entered into to expand the books of the bank. “This is the frst ever long term fnancial debt ZANACO has ever raised in the international markets…,” Wiessing said. It is FMO of Neth-erlands and Proparco who have decided to provide a debt facility to ZANACO to strength the bank’s performance. “It will also be used for on lending to our customers, particularly those in the agriculture sector,” the CEO said. The Netherlands Embassy in Zambia has also committed Euro 2 million in grants to facilitate improvement projects within the bank.

The new team has also managed to transform the bank into a truly commercial bank with international scope. All the ZANACO Automated Teller Machines (ATM) cards have been converted to VISA-Election Cards, which will enable customers access their accounts on all the Visa-enabled ATMs worldwide. The ATM machines have also been increased from 35 to 58 and the target is to grow them to about 100 by the end of 2008, said Wiessing. While some branches have been going through refurbishment, the bank launched the GPRS en-abled Point of Sale terminals in the branches. Farmers should be trooping to ZANACO following the launch of an agriculture product called Munda Scheme, a seasonal fnance facility for peasant and small-scale farmers. In the frst half of the year, the bank grew by over 40 percent in revenue compared to last year, Wiessing said. “This is an encouraging statistic…,” he boasted.

The most exciting service to which ZANACO has beaten all other competitors is the Xapit, a kind of cell phone banking that allows customers to buy airtime, pay bills such as DSTV and make money transfers to third parties using the ATM. ZANACO is the frst bank to implement such a service, which will operate 24 hours a day. “It will be made available to the existing customers, but ultimately also to the (two) 2 million people who have a cell phone but not a bank account,” said Wiessing. This facility, if well implemented, will allow most Zambians who have no access to banking facilities to access fnancial services using their cell phones.

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