Weak management chokes Women’s Bank; bank operating without Risk Management dept head, minimum capitalisation

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By Alois Vinga

THE Zimbabwe Women’s Microfinance Bank (ZWMB) is stuck in deep seated administrative weaknesses which have seen the institution operating without critical posts, failure to meet minimum regulatory capital requirements among other factors.

Established in 2018 and becoming the first women’s bank in Southern Africa, ZWMB is a deposit-taking microfinance institution targeting marginalised community members who cannot easily access conventional commercial banks, particularly rural women.

The bank is mired in a series of controversies prompting parliamentarians and other stakeholders to express doubts over the institution’s capacity to turn around the lives of millions of women trapped in poverty.  

Last month, ZWMB made headlines after the Reserve Bank of Zimbabwe (RBZ) informed the public that regulatory processes exposed corporate governance and risk management weaknesses at the institution.

Speaking to recently, ZWMB chief executive officer, Doctor Mandas Marikanda laid bare the weaknesses bedevilling the institution.

“During one of the routine inspections, the RBZ officials observed that the bank had deficiencies in the area of risk management, corporate governance and capitalisation.

“In terms of risk management, every bank is expected to run with key positions. I have ten Heads of Departments and currently the bank is operating without the HOD for Risk Management as well as Compliance,” she said.

Marikanda explained that the bank has been running for almost one year without the Head of Risk Management prompting the bank to flag out the anomaly as very critical.

“On corporate governance, the issues identified had to do with the management board. Ideally the board must be made up of nine people but currently has only six people. It is well constituted though issues were identified within the committees.

“There are five or six committees which are expected to run with three non- executive directors each operating with two each. The RBZ takes this to be a serious weakening of the management board.

“However, this is a matter beyond our control because the government has responsibility to identify and second the committee members.

“The third issue concerns minimum capitalisation which in line with the RBZ dictates currently stands at US$5 million which again is the government’s responsibility to fund its bank,” she said.

Commenting on the state of affairs at the ZWMB, economist Doctor Prosper Chitambara described the obtaining situation as “dire” requiring urgent redress for the good of the entire financial ecosystem.

“The essence of banking is rooted in risk management and compliance and failure to incorporate these posts into operations exposes the bank to sustainability risk. It means the bank is in trouble.

“In the broader context, it threatens the rest of the financial sector because a challenge in one bank is diffused to each other,” he said.