Connect with us

Support The NewsHawks


Shady financial engineering as Mnangagwa tightens his grip on levers of Treasury



WITH his close business ally John Muyashavanhu now confirmed as the incoming Reserve Bank of Zimbabwe (RBZ) governor, George Guvamatanga as Finance permanent secretary — chief accounting officer of the ministry — and his son David Kudakwashe deputy Finance minister understudying his immediate boss Mthuli Ncube, President Emmerson Mnangagwa has now taken full control of the levers of Treasury.


As part of his power consolidation strategy and shady financial engineering plans, Mnangagwa now fully controls the country’s purse strings. The ministry of Finance is the national Treasury, while RBZ is government’s banker.

The ministry and RBZ control the country’s financial architecture, banks and other financial services institutions, hence financial intermediation.

With his loyalists in charge, Mnangagwa has free rein on fiscal and monetary policies, the financial system and its services, budget process and national revenue and expenditure, as well as assets and liabilities, public entities and state constitutions.

His power was recently demonstrated during the recent budget presentation where Ncube revealed he was merely delivering his boss’ spending plan.

The controversial commandeering of state enterprises and public assets into the Mutapa Investment Fund (MIF) without following constitutional and legal processes also helped to demonstrate the President’s octopus grip on public affairs.

On Mnangagwa’s watch, the government and his close allies are tightening their grip on CBZ Holdings, the country’s largest financial services institution running the biggest bank.

As first reported by The NewsHawks two years ago, the project is gathering momentum.

On 3 September 2021, we exclusively reported that the government, bankers and investors, including local business tycoon Kudakwashe Tagwirei, are working on a plan to create the biggest financial services institution in Zimbabwe, with an asset base of over US$2.5 billion. 

Now the deal — which will change the financial landscape of the country — is in the process of being consummated.

The core of the project will involve merging leading financial institutions, including CBZ Holdings, ZB Financial Holdings, First Mutual Holdings Limited (FMHL) and First Mutual Properties (FMP).

The new institution — which will have a footprint on local and regional markets — will involve serious financial engineering and megabucks.

It will have five major divisions: banking, insurance, investment, property and agriculture.

Marc Holtzman His axis with Mnangagwa and CBZ Bank

The merger and subsequent consolidation process were led by outgoing CBZ chairperson Marc Holtzman, an American international banker, who was appointed on 1 September 2019.

In a notice to shareholders this week, CBZ announced the departure of Holtzman and chief executive Blessing Mudavanhu. Luxon Zembe is now acting chair, while Lawrence Nyazema is acting chief executive.

The shock departures come as CBZ has assumed a controlling stake in ZB in a transaction that strategically positions it to increase capacity and dominate the market.

As part of its growth and expansionary drive, CBZ has already concluded a 31.2% purchase in FMHL from the former majority shareholder, the National Social Security Authority (Nssa), which once held 65.5% shareholding.

Apart from that, Mnangagwa’s government also has plans to merge six financial institutions into three big ones in a consolidation process different from the CBZ, ZB, FMHL and FMP one.

The other mergers being considered involve a merger of FBC, in which Nssa is the single largest shareholder, and National Building Society (NBS), a wholly-owned Nssa subsidiary.

Although Mushayavanhu, Guvamatanga and the President’s son are professionals in their own right who deserve to serve in public positions if they have relevant qualifications and experience, they were not appointed strictly on meritocracy, but mainly on patronage.

John Mushayavanhu

To Mnangagwa, ethnicity, clansmanship and loyalty also matter a lot.

Some enlightened and exposed Zimbabweans rightly frown upon ethnic politics, preferring the meritocracy model which has a proven track record of building prosperous nations such as Singapore, China and other southeast Asian economic tigers, for instance, but the reality is under Mnangagwa villagisation of government is now a political project and an undeclared public policy.

In the process, Mnangagwa’s murky clan networks and shady arrangements have penetrated and taken control of state institutions.

The late former president Robert Mugabe did it as he positioned his own people to run government and establish political hegemony that kept him in power for 37 years, but Mnangagwa is brazen about it – he has taken clan politics to a new level.

His clan-based appointments and patronage system; stripping state assets to feed his clan networks, while crowding out other mechanisms of diversity and national representation, have intensified since the August general elections.

Mnangagwa’s cabinet appointments, civil service deployments and control of strategic positions have placed his clansmen from the Midlands and Masvingo in control, fuelling undesirable ethnic tensions.

Mnangagwa’s programme of villagisation of government through systematic ethnicisation of state institutions to ensure political and ethnic supremacy gathered momentum recently when he brought in Gutu West MP John Paradza as Environment, Climate and Wildlife deputy minister and former Midlands minister of State Larry Mavima as Public Service Commission boss against the backdrop of the appointment of a village cabinet.  

Paradza’s position was kept for him until after the delayed election in his constituency. The poll had been postponed as required by the law beyond the general elections due to the death in a road accident of independent candidate for Gutu West, Christopher Mutonhori Rwodzi .

The President reserved the position for Paradza.

Mnangagwa recently came under fierce attack following the controversial elections after which he threw wide open the floodgates for ethnic and political cronies, and relatives to get into government through the village cabinet.

Zanu PF has a long history of politicising and weaponising ethnicity to secure and retain political power.

Mnangagwa’s appointments undermine formal institutions, and create an underworld coterie of self-serving networks best understood as clan politics.

Mushayavanhu’s appointment falls neatly into that pattern.

It was an appointment that was an open secret in terms of its inevitability. Every informed Zimbabwean knew Mnangagwa would appoint Mushayavanhu, currently FBC Holdings (FBCH) chief executive, the new RBZ governor once the incumbent John Mangudya completes his term on 30 April 2024.

Even well before Mnangagwa became President, it was also known that once he took over — which subsequently happened through a coup in November 2017 — there were certain individuals who would occupy senior political, bureaucratic and technocratic positions in his government.

Mushayavanhu was one of them.

He is part of the inner circle. Mushayavanhu is Mnangagwa’s close political, business and personal associate. Some say they are also related.

Out there, Mushayavanhu is known as Mnangagwa’s close and trusted business associate, having worked with him in the nexus between Zanu PF companies, local business circles and the Democratic Republic of Congo (DRC) investment adventures during the Congo War from 1998-2002.

Mnangagwa — Mugabe’s point man on the war even though he was not Defence minister then — and Zimbabwe’s military networks through Operation Sovereign Legitimacy (Osleg) and associated companies were accused by the United Nations of looting in the DRC.

In 2008, the United States sanctioned Thamer Bin Saeed Ahmed Al-Shanfari, an Omani national with close ties to the Mugabe regime and his top officials then, as well as his company, Oryx Natural Resources, which mined diamonds in the DRC. Zimbabwe’s military company Osleg (Pvt) Ltd was also sanctioned.

Al-Shanfari has since fled Zimbabwe running from some unresolved local crimes.
Given his closeness to Mnangagwa, Mushayavanhu was certain to replace his namesake John Mangudya.

Before that, Mnangagwa’s political allies were so impatient such that they wanted Mushayavanhu to replace Mangudya in 2019 when his first term ended. There was a big fight for Mangudya to get a second term.

Mnangagwa however allowed Mangudya to finish his term. The President reportedly has a soft spot for Mangudya.

That is why he has appointed him the new chief executive of the Mutapa Investment Fund, formerly the Sovereign Wealth Fund headed by his former central bank deputy Khuphukile Mlambo.

The Mutapa Investment Fund has taken over more than 20 state enterprises, becoming a super-parastatal, a behemoth. That gives Mangudya a new powerful position, much more influential than the RBZ job despite the opaqueness of the arrangement.

Even Mangudya’s new role was already well-known in the market months ago.

 The NewsHawks and many other people had heard of it months before its official confirmation.

Yet it is Mushayavanhu’s new appointment that has further shown how Mnangagwa operates in the shadows. He is surrounded by cronies, close relatives and friends — clansmen. Mushayavanhu hails from Masvingo and fits the bill.

Interestingly, his appointment was announced by Mnangagwa’s relative Martin Rushwaya, Chief Secretary to the President and Cabinet.

Rushwaya replaced another Mnangagwa relative Misheck Sibanda from the Midlands appointed by Mugabe who also practiced the same politics as his successor.

Mushayavanhu worked with Mnangagwa in the DRC and the President’s close business allies — the Joshi family (Jayant, Manharlal, Ketan and Heena) which was embedded in mostly defunct Zanu PF businesses — on deals involving the Zuva Petroleum takeover from Masawara, owned by local tycoon Shingi Mutasa, in 2014. The Joshi family was put in Zanu PF businesses by Mnangagwa when he was Zanu PF treasurer in the early years of Mugabe’s rule.

The Masawara and later Zuva assets were initially owned by the London headquartered oil and gas multinational, BP & Shell.

Mushayavanhu executed the US$29.3 million Zuva deal on behalf of the Joshi family through his Wobble Investments. Glencore, one of the largest global diversified natural resource companies in the world, funded the convoluted transaction.

Mnangagwa lurked in the shadows of the transaction.

More recently, Mushayavanhu led the acquisition of Standard Chartered Bank assets in Zimbabwe by FBCH, a Nssa-controlled financial services group with strong Zanu PF links.

Under the agreement, FBCH will acquire 100% of the shareholding in Standard Chartered Bank (Zimbabwe) Limited and, by extension, the custodial services business that is wholly owned by the local British bank subsidiary.

As part of the agreement, FBCH will also acquire the economic interest in Africa Enterprise Network Trust whose main asset is 20.7% shareholding in Mashonaland Holdings.

FBCH will continue to employ all of Standard Chartered’s employees. The two banks will work closely in the coming months to provide a seamless transition for its clients and staff.

Mushayavanhu said the acquisition enables FBCH to consolidate its banking market share, customer base and market competitiveness in a rapidly changing banking landscape.

Mushayavanhu said: “We are pleased to sign this agreement today and to have been selected by Standard Chartered Bank as the preferred buyer. Standard Chartered is a leading regional and international bank with more than 150 years of experience globally. The bank has been present in Zimbabwe for more than 130 years. Equally, FBCH is a leading financial services group in Zimbabwe and the region, with interests in commercial banking, insurance, re-insurance, micro-finance, stockbroking and mortgage finance. The combined strengths of the two institutions will enable us to better respond to the ever-changing requirements of our clients.”

In April 2022, Standard Chartered strategically decided to divest from a number of markets, namely Lebanon, Angola, Cameroon, Gambia, Sierra Leone, Zimbabwe and Jordan, and to exit the Consumer Private and Business Banking business in Côte d’Ivoire and Tanzania.

The bank announced its sale of its business in Jordan earlier in March this year. 

A career banker, Mushayavanhu has over 30 years’ experience in the financial services sector, gained through senior positions in corporate and retail banking he held with the local bank.

He joined FBC Bank, which has links with murky Zanu PF business interests, as an executive director in the corporate banking division in October 1997.

 It was still called First Banking Corporation, running First Bank. After it was rebranded FBC Holdings in 2004, he was appointed managing director and deputy group chief executive.

He then became chief executive of FBC Holdings in June 2011. He is past president of the Bankers’ Association of Zimbabwe and he sits on many boards.

FBC’s roots are traceable to Zanu PF.

Zanu PF shelf companies had a combined 32.05% stake FBCH) which controlled the then First Bank, Southern Africa Reinsurance (Sare), and troubled National Discount House.
The shareholding in FBCH was initially structured as follows: Segmented Investments 13.76%, Hustonville 4.36%, Amelia 3.54%, Tescrom 3.54%, M&S 3.06%, Smoothnest 3.06% and Ryobi Investments 0.82%.

Before the transformation, Zanu PF was represented in First Banking Corporation through AM Treger and Zidco Holdings, which held 13.5% each. M&S Investments and Smoothnest Investments had a combined shareholding of 37.84% in Sare, split equally between the two shelf companies used for sanctions busting by the ruling party.

Zanu PF formed FBC because it wanted a bank to rely on whenever it needed to borrow money. It used to borrow money from the CBZ Bank, which then came under South Africa’s Absa financial services group, closing the credit tap.

CBZ Bank is now once again under Zanu PF and government sphere of influence after Absa divested. Mnangagwa’s government is supervising the new CBZ project.

Zanu PF representatives in the bank were Jayant Joshi standing in for AM Treger and Dipak Pandya for Zidco Holdings, a company in which the ruling party had an interest. First Bank, later FBC, had a management contract in the DRC, which later collapsed.

The directors of First Bank DRC were Mnangagwa, then Zanu PF secretary for administration, Livingstone Gwata, Webster Rusere, Dipak Pandya and Mushayavanhu.

Mushayavanhu’s appointment to Reserve Bank of Zimbabwe governor is a culmination of a long history of networks, loyalties and a manifestation of a web of an intersection of political, business and personal interests, compounded by the running thread of clan politics.

Continue Reading
Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *