March 27, 2003

Government will partially privatise Zambia National Commercial Bank

Government has back-pedalled on a decision to offer 51 per cent shares to a strategic investor in the Zambia National Commercial Bank (ZNCB) in direct response to a public outcry. In a ministerial statement to Parliament on March 26, Commerce Trade and Industry Minister Dipak Patel also stated that ZNCB had not been sold resting speculation on the matter. Mr Patel announced a new sale agreement format in which Government and the Zambian population would retain 51 per cent minimum majority and controlling interest while the strategic partner would only be offered a maximum of up to 49 per cent with management rights.

A number of banks including ABSA Bank of South Africa had at the close of bids in December 2002 indicated willingness to take up 51 per cent shareholding in ZNCB. The offer was increased from 35 per cent after potential banks demanded a greater controlling interest. Mr Patel broke down the 51 per cent share structure as 25 per cent to be owned by Government, 25.8 per cent to be offered to the Zambian public but this would be held in trust with the Zambia Privatisation Trust Fund before being offloaded. About 0.2 per cent would be retained by the already existing minority shareholders. Mr Patel said the new position would be communicated to the Zambia Privatisation Agency (ZPA) to begin fresh negotiations and that he would be actively involved to avoid past pitfalls experienced with Roan mine, Maamba Collieries, Kafue Textiles and Nitrogen Chemicals of Zambia. He said a sealing would be placed on the number of shares that an individual could purchase in order to ensure equal and fair ownership among Zambians.

He said it was no secret that ZNCB had been abused by the past governments, unscrupulous borrowers and some politicians citing the K212bn lent to defunct Zambia National Oil Company (ZNOC) and RAMCZ which substantially increased the non-performing debt portfolio. "ZNCB is still in a very precarious position. We had to make a choice between keeping the bank but if we do not have money it will collapse. In my opinion this decision is six-seven years late," he told Parliament.

In order to secure the workers, Government will in its new position insist that the strategic partner does not close any rural bank and that any workers to be retrenched should be paid from the proceeds of the sale of shares.

Luapula MP Peter Machungwa (MMD) asked what guarantee was there that the strategic partner would not buy out the minority shareholders but Mr Patel said all loopholes would be sealed during negotiations and warned of sanctions if the negotiating team flouted any rules. On paying the K15bn interest on the bond issued to absorb RAMCZ and ZNOC debt, Mr Patel said he could not divulge all the information at this stage but that the issue was under negotiation. (The Times of Zambia, Ndola)

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