Published: 11 hours ago

Veteran banker and Intermarket Holdings founder Nicholas Vingirai has delivered a scathing critique of Zimbabwe's financial system, warning that regulatory volatility, currency instability, and a decimated deposit base have left banks unable to support industrial growth or earn public trust.

Speaking on the sidelines of the In Conversation with Trevor Ideas Festival in Nyanga, Vingirai — one of Zimbabwe's most influential financiers — said constant shifts in monetary policy and interest rates had destroyed confidence and crippled long-term planning in the banking sector.

"If your regulator tweaks or changes interest rates often, you are not going to have direction," Vingirai said. "You cannot price your own funding properly because nobody knows what the rate will be tomorrow. The market is not signalling properly as to where interest rates are going."

He warned that any attempt to stabilise the economy must be structured, predictable and sustainable, arguing that abrupt policy reversals have repeatedly undermined businesses and financial institutions.

"If it is not sustainable, whatever stabilisation arrangement will change against business any day and businesses won't survive," he said.

Vingirai, who established Intermarket Holdings (now ZB Financial Holdings Limited), described Zimbabwe's financial sector as "destroyed," saying it no longer serves its developmental role.

"We have destroyed our financial sector. We do not have a currency. They are mobilising US dollar deposits," he said. "People no longer trust the banks. So the banks have no capacity because they do not have a deposit base to support industry."

He lamented the collapse of the once robust financial architecture that existed before the mid-2000s, when banks had clearly defined functions. Merchant banks financed industrial and commercial ventures, commercial banks handled retail and transactional services, while discount houses provided liquidity support.

"That structure fostered efficiency, provided liquidity support, and encouraged healthy competition," he said. "But between 2004 and 2008, a wave of bank closures dismantled that system. It means you have killed competition in the funding sector. Customers have few choices and those that remain do what they like when customers come for funding."

Vingirai said today's banks have abandoned their traditional role of financing business and instead focus on transactional services such as money transfers and payments.

"Currently, banks are no longer funding business as a core activity," he said. "They focus on transactional banking, money transfers, more than industry and commerce. The expertise in the banks has evaporated."

The former banker warned that this shift has dire implications for start-ups and emerging enterprises, which already face multiple hurdles including inflation, exchange rate instability, and a lack of venture capital.

"If we are talking of local start-ups, they will struggle," he said. "You are looking for funding in a financial sector that is broken down. They do not have the capacity to fund even established businesses, let alone a startup."

He said the absence of developmental lending forces new businesses to compete on an uneven field with older companies that once benefited from now-defunct credit lines and capital facilities.

"So, fighting against such established entities is not going to be easy," Vingirai added. "This hits startups more than it does established institutions."

Analysts say Vingirai's remarks highlight the urgent need for comprehensive financial sector reform, including stable monetary policy, restoration of trust in banking, and renewed focus on productive lending — pillars essential for reviving Zimbabwe's struggling economy.
- Zimbabwe Independent

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