THERE are two explanations to the fact that for years, the Reserve Bank of Zimbabwe has not issued banking licences. Investors, terrified, by waves of boom and bust in Zimbabwe, are sitting on the fence.

They want to ascertain how secure their investments would be, before taking a plunge.

But the central bank knows that the landscape remains risky to dish out new financial services licences when the economy is relapsing, with signs pointing to a return to headwinds witnessed about 15 years ago. Back then, financial services empires collapsed under shareholder delinquency and economic mismanagement. The truth is, the Zimbabwean terrain is still fraught with dangers. Investors will not have to cast their eyes far to see this.

Following decades of a presence in Zimbabwe, Standard Chartered Bank, one of the world’s biggest financial services brands, threw in the towel last year. It is currently winding up operations before selling the business to suitors. Barclays Bank, another global lender of note, divested out of Zimbabwe about five years ago.

The International Monetary Fund is also worried about prospects for Zimbabwean banking. This is why the most recent banking licences – that of the Womens’ Microfinance Bank and Empower Bank – were issued through encouragement from government, which is determined to uplift these two special groups.

Under the circumstances, the revamp of state-run agricultural lender, Agribank and rebranding to AFC Holdings (AFCH) last year was ill conceived. Zimbabwe’s economy was already in turmoil when the idea was mooted, but because authorities often have other ulterior considerations when spending tax payers’ funds, Agribank had to go, ostensibly to deepening government’s sources for agro-lending.

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Spending power was crushing as the Zimbabwe dollar took extensive battering from a full-blown exchange rate crisis as government rolled out AFCH. Companies were still scaling down operations, under pressure from rampaging inflation, then running at three-digit ranges and prices where rocketing at a far brutal scale than at any other time since 2019. Employment levels had plummeted from 3,8 million during boom times 30 years ago to only about one million currently. In short, opportunities for financial services empires were narrowing, which placed the viability of such investments at stake.

Only in March, policymakers said a total of 356 055 insurance policies lapsed during the final quarter of last year, and over two million more are in danger. Again, opportunities in that space are vanishing.

The Confederation of Zimbabwe Industries says 65% of 4 552 manufacturing firms are now classified as small, following brutal de-industrialisation. Over five million Zimbabweans have turned to the informal sector, which rarely requires financial services.

In a market already bleeding on all fronts, the establishment of a big financial services outfit by the state was shocking. Troubles confronting AFCH, and its units today, had its genesis in the way it came to the scene. It was a rushed move that had no basis excerpt, possibly to create fresh avenues of looting, or create jobs for the boys.