Prof. Mufaro Gunduza
Corporate Governance and Regulation Issues in a Casino Economy: Insights from Zimbabwe’s ReNaissance Merchant Bank (Working paper)
‘We should put out fire while it is yet small’, African proverb
Mufaro Gunduza
Abstract
In the last ten years the Zimbabwean financial landscape has witnessed fundamental tectonic shifts (Gono, 2008). High inflation soared to hyper-inflation and further galloped into unbelievable supersonic inflation (Mnaba, 2012). The country degenerated into a classic ‘casino economy’ where the survival instinct dictated the corporate path of the day. Business ethics and sound corporate governance practices were discarded as corporations tried every trick in the book to keep their heads above the waters. As Mnaba (2012) argues “a business landscape where there are no ethics is a gangster’s paradise”. For every cause, Brian Tracy (2001) similarly argues, there is a corresponding effect. Financial landscapes that sow to the wind will certainly reap a whirlwind (Greenspan, 2007). This article seeks to interrogate the governance challenges that engulfed the Zimbabwe Financial Services Sector resulting in several banks collapsing and some being put under recuperative curatorship. It looks at the ReNaissance Merchant bank case as a microcosm of the wider picture in the Zimbabwean banking industry and tenders valuable strategic and corporate antibiotics to hedge against financial fragility and enhance financial stability. Ethical and governance frameworks such as the King 111 and ‘ubuntu’ among others are utilized here as critical lenses and spectacles to cross examine and investigate the various corporate behaviors and practices which emanated from the economic hardships. This enquiry emanates from robust focus group discussions, vigorous engagement with the central bank management and staff, periodic official compliance and status quo reports, high court judgments and interviews with concerned entrepreneurs and top level managers.
Key
‘We should put out fire while it is yet small’, African proverb
Mufaro Gunduza
Abstract
In the last ten years the Zimbabwean financial landscape has witnessed fundamental tectonic shifts (Gono, 2008). High inflation soared to hyper-inflation and further galloped into unbelievable supersonic inflation (Mnaba, 2012). The country degenerated into a classic ‘casino economy’ where the survival instinct dictated the corporate path of the day. Business ethics and sound corporate governance practices were discarded as corporations tried every trick in the book to keep their heads above the waters. As Mnaba (2012) argues “a business landscape where there are no ethics is a gangster’s paradise”. For every cause, Brian Tracy (2001) similarly argues, there is a corresponding effect. Financial landscapes that sow to the wind will certainly reap a whirlwind (Greenspan, 2007). This article seeks to interrogate the governance challenges that engulfed the Zimbabwe Financial Services Sector resulting in several banks collapsing and some being put under recuperative curatorship. It looks at the ReNaissance Merchant bank case as a microcosm of the wider picture in the Zimbabwean banking industry and tenders valuable strategic and corporate antibiotics to hedge against financial fragility and enhance financial stability. Ethical and governance frameworks such as the King 111 and ‘ubuntu’ among others are utilized here as critical lenses and spectacles to cross examine and investigate the various corporate behaviors and practices which emanated from the economic hardships. This enquiry emanates from robust focus group discussions, vigorous engagement with the central bank management and staff, periodic official compliance and status quo reports, high court judgments and interviews with concerned entrepreneurs and top level managers.
Key
References: Armah, Ayi Kwei (1979) The Beautiful Ones Are Not Yet Born, Heinemann, London Fick, David (2006) Africa: Continent of Economic Opportunity, STE Publishers Greenspan, Allan (2007) The Age of Turbulence: Adventures in a New World, Penguin, USA Gono, Gideon (2008) Zimbabwe 's Casino Economy: Extraordinary Measures for Extraordinary Challenges, Zimbabwe Publishing House Magaisa, Alex (2012) Opinion on Curatorship of Banks, in New Zimbabwe.com Mambondiani, Lance (2012) Opinion on the Collapse of Interfin, New Zimbabwe.com Maxwell, JC (2002) The 360 Degree leader; Developing your Influence from Anywhere in the Organization, Thomas nelson, Nashville, Tennessee Rossouw, Deon (2002) Business Ethics In Africa, Oxford Press Tracy, Brian (2001) The 100 absolutely Unbreakable Laws of Business Success, Berrett-Koehler Publishers, Vancouver