The government will increase the price for the stake in state-owned Zambia National Commercial Bank (Zanaco) it is selling to Rabobank after criticism of the deal, a government agency said on Wednesday. The government has come under fire from trade union groups and some opposition parties for agreeing to sell the 49 percent stake in Zanaco to Dutch bank Rabobank for $8.3 million.
The Zambia Development Agency (ZDA), which is supervising the sale, said in a statement that Rabobank and the government would appoint independent auditors to re-assess the net asset value of Zanaco, one of the sub-Saharan country’s largest retail banks.
“(The government) and the strategic investor will commission an independent auditor to determine the net asset value of the bank … on which basis the price adjustment will be made,” the ZDA said.
The ZDA said the purchase price for Zanaco was based on the bank’s financial assessments conducted in December 2004. Since then, the bank’s assets had grown and it was making more profit.
“Over time, however, the financial status of the bank has changed, and there is therefore need to assess the change which will result in a price adjustment as provided for in the sale and purchase agreement,” the ZDA said.
The ZDA said the government had agreed with Rabobank to maintain rural branches that serve farmers for a period of 10 years after complaints that farmers would not manage to obtain favourable terms and services from other multi-national commercial banks.
“Contrary to apprehensions and concerns by the public, (Rabobank) has agreed with the government that it will maintain all existing rural branches for a period of 10 years with the exception of possible relocation of branches,” the ZDA said.
The agency said plans to float a further 25.8 percent of Zanaco held by the government on the Lusaka Stock Exchange (LuSE) would be concluded soon, but gave no exact date.
Under the deal, the government would retain 25 percent shares after the LuSE listing, while minority shareholders would retain 0.2 percent shares.
The sale of nearly half of Zanaco has dragged on for nine years and has been surrounded by controversy after the International Monetary Fund (IMF) placed the privatisation of the bank as one of the conditions for Zambia’s access to IMF loans.