“The introduction of the foreign exchange auction system in June 2020 brought a modicum of stability in the exchange rate, which curtailed the rapid expansion in the general price level.”
Operating environment
The operating environment remained beset with significant headwinds in the year 2020, with the outbreak of the COVID-19 pandemic taking centre stage, exacerbating an already fragile domestic economy. Like most other economies globally, Zimbabwe endured varying levels of lockdown restrictions during the year and subsequent to year end, as part of measures instituted to limit the spread of the COVID-19 virus. This adversely affected business activities across the board.
The introduction of the foreign exchange auction system in June 2020, brought a modicum of stability in the exchange rate, which curtailed the rapid expansion in the general price level. This saw annual inflation rate dropping from a peak of 837.53% in July 2020 to 348.59% in December 2020.
According to the Confederation of Zimbabwe Industries, industry capacity utilisation improved to 47% as at year end, compared to 36.4% in 2019.
Group Performance
I am pleased to announce that despite challenges in the macroeconomic environment, the ZB Financial Holdings Limited (ZBFH) Group remained profitable, with greater detail shared in the Acting Group Chief Executive’s report.
Capital Requirements
As at 31 December 2020, all ZBFH companies were in compliance with prescribed minimum capital requirements.
The Group is confident that it will meet the new minimum capital requirements for banking operations, which come into effect from 31 December 2021. This will be achieved by the re-arrangement of capital resources and the planned merger of banking operations within the Group which should result in the Group retaining a single banking licence, should required approvals be obtained before the regulatory deadline.
Dividend
The Board has declared a dividend of ZW$0.7413 per share for the year ended 31 December 2020. A detailed dividend announcement will be published after the Annual General Meeting.
Legal Contingencies
The long-standing legal dispute between the Company and Transnational Holdings Limited (THL) regarding the ownership of Intermarket Holdings Limited (IHL) was resolved by the withdrawal of THL’s appeal at the Supreme Court of Zimbabwe on 2 October 2020. This followed a settlement arrangement in which the Government of Zimbabwe (GoZ) ceded its shareholding in the Company to THL in transactions concluded between 2017 and 2020.
Compliance & Regulatory Issues
The Group has dealt with all governance issues which were the subject of a Corrective Order issued by the Reserve Bank of Zimbabwe (RBZ) on 7 March 2017 and reviewed in March 2018 and awaits the lifting of the order upon satisfactory review by the regulator.
Directorate
Messrs Sydney Bvurere and Olatunde Akerele resigned from the Board on 3 May 2021 and Ronald Mutandagayi resigned as Group Chief Executive from the Board and the Company on 31 May 2021.
On behalf of the Board, I would like to express our gratitude for their diligent service to the Group and wish them success in their future endeavours.
Mr Fanuel Kapanje was appointed on 1 June 2021 to act as Group Chief Executive pending recruitment of a substantive Group Chief Executive.
Outlook
The Zimbabwean economy is projected to rebound in 2021 and beyond, following contraction in 2019 and 2020. The positive outlook is predicated on an above-average 2020/21 farming season, a tight monetary policy complemented by fiscal discipline, stability in the exchange rate and expected further slow-down in inflation.
The Group will proceed with cautious optimism in the short to medium term. It remains imperative for the Group to continuously seek ways to preserve its capital from value erosion occasioned by inflation. Furthermore, the ‘new normal’ brought about by the COVID-19 pandemic has placed increased importance on the need to build digital capacities for customer service delivery in a sustainable and cost-effective manner.
Conclusion
I wish to express my appreciation to all our valued Customers and Stakeholders, for the support and commitment to the ZBFH Group. I am grateful to fellow Directors, Management and Staff, for their hard work and contributions for the year ended 31 December 2020.
Pamela Chiromo
Chairman
