North-West University Doctoral Study Shows Poor Regulatory Supervision As The Reason Behind Bank Failures In Zimbabwe

The rampant failure of banks in Zimbabwe in the past 20 years has now been explained: a major reason is inadequate supervision of banking institutions by the Reserve Bank of Zimbabwe (RBZ) and other regulatory bodies.

This is according to the doctoral study of Menelisi Ncube, who recently graduated from the North-West University (NWU) as a Doctor of Laws in mercantile law.

In his study, Menelisi investigated why the banking institutions in Zimbabwe have been failing from around 2002 to date.

His thesis was titled “A comparative statutory analysis of the regulation and supervision of banking institutions in Zimbabwe”.

Menelisi attributed the many bank failures in Zimbabwe since 2002 to poor regulatory supervision and bad enforcement of the proper corporate governance measures, credit risk management and bank fraud strategies, as well as the poor assimilation of appropriate contemporary technology.

His thesis included a comparative analysis of the regulatory and supervisory strategies in other countries such as South Africa, Canada and the United Kingdom, especially during the Covid-19 pandemic.

“Therefore, I proposed a novel model for the robust regulation and supervision of banking institutions in Zimbabwe to curb the failures that have been experienced historically,” said Menelisi.

“This included a shift to the ‘comply or else’ approach instead of the ‘comply or explain’ approach in regulating corporate governance measures for banking institutions in Zimbabwe.”

It is hoped that Menelisi’s findings will come to the attention of Zimbabwean policymakers so that the regulatory loopholes can be closed.