Many of you should be familiar with the success story of Costain Chilala, the Zambian farmer whose business exploits have inspired other Zambians into believing that it is possible to find achievement in what was previously thought to be the domain of white farmers.
His farms in the Mkushi farming block in central Zambia are a marvel to behold, with vast tracts of land dotted with numerous state-of-the art centre pivots and combine harvesters, making him one of the leading black Zambian farmers in the country.
Now, if you thought Chilala was still riding on cloud nine, the way you knew him some years back, think again.
Chilala is finished.
Because of what Zambian Supreme Court Judge Mumba Malila calls “predatory banking practices”, Chilala is on the verge of losing some of those farms that made him the envy of the Mkushi farming bloc.
A simple dictionary definition of a “predator” is “an animal that naturally preys on others” or “a person who ruthlessly exploits others”.
To refresh your memory of the Supreme Court judgment in March 2017 in which Judge Malila used the word “predatory”, we shall now give you a brief background.
According to a Supreme Court of Zambia judgment number 06 of 2017, appeal number 155/2016, Chrismar Hotel Limited approached Stanbic Bank Zambia Limited in 2008 with a view to obtaining some finance leases for earthmoving and other equipment.
The bank acceded to the requests and, consequently, eight finance agreements were executed amounting to an aggregate sum of US$1.7 million and were secured by third party mortgages over Stand number 4772/M, Chudleigh, Lusaka and Stand number 6982/3, Lusaka.
Repayment of the sums was to be made in monthly instalments over a period of 60 months, ending on 30 th May, 2013.
At the end of the lease period, the total repayment was to be US$2, 280, 121.00, and default in any monthly payment was to attract interest, calculated daily in arrears on the outstanding amount.
Chrismar commenced repayments and, by 30 th October, 2012, had made a total payment of US$2, 036,146.35. Thereafter, on 4 th December, 2012, Chrismar made another lump sum payment of US$377,022.08, bringing the total to US$2,413.168.43.
Shockingly, and in breach of the terms of the lease agreements, Stanbic Bank applied various interest charges together with additional charges and expenses which interest were debited to Chrismar’s account without a plausible explanation.
The additional charges were: extension charges, late charges, interest, arrears, overdraft cover charges, interest over and above the agreed base rate and an alleged loan facility.
Further, contrary to the Banking and Financial Services (Cost of Borrowing) Regulations 1995, Stanbic Bank applied penal and/or default interest totaling US$166, 133.00.
As if that were not enough, Stanbic employed a method not sanctioned by the finance lease agreements, computing and demanding that Chrismar pays an additional US419, 515.84.
The bank also refused to release the security held in respect of the facility until payment of the sum allegedly due was made.
Chrismar later took the matter to the High Court where it lost and decided to appeal to the Supreme Court where the matter was heard and Judge Malila, sitting with Judge Nigel Mutuna and Charles Kajimanga, made the observations which now bring us back to the word “predator”, which is how some banks like Stanbic behave.
Below were the court’s words:
“Bank charges, especially those not expressly agreed to by customers, are increasingly becoming a worrisome consumer controversy in this country. Many a bank customer have quietly grumbled about what is viewed as un-agreed debits on customers’ accounts made up of variously labeled bank charges. This, coupled with the seemingly unlimited authority of banks to do what they wish with their customers’ accounts in ensuring their profitability, has generated
considerable resentment to some banking practices of banking services.
“What precipitated the dispute that ultimately birthed this appeal are some allegedly predatory banking practices undertaken by the respondent bank [Stanbic Bank Zambia] in respect of the appellant’s accounts held with it.”
It is these predatory bank charges and practices that Stanbic Bank has consistently used to grab farms and properties from unsuspecting Zambian businessmen who, in good faith, thought the bank was in Zambia to help grow their businesses.
If it means scandalizing or maliciously reporting its clients to the Credit Reference Bureau, Stanbic will stop at nothing, all in its cruel crusade to create an impression to the outside world that Zambians are bad at paying back and, therefore, restricting financing opportunities for major
Such strange and oppressive bank charges, as seen in the case of Chrismar Hotel, are simply meant to make the business environment less competitive for South African-owned businesses.
So, companies like Chrismar and Savenda Management Services Limited, which have waged legal battles and won their cases, must be commended as they have given hope to other indigenous businesses that banks can be challenged until justice is delivered.
The Mkushi farmer, Chilala, is not alone in this predicament of those that have suffered at the hands of Stanbic. Ask Trade Kings or Universal Mining. They will tell you their own experiences with this bank.
One fact that most Zambians do not understand is that Stanbic Bank is in Zambia to primarily serve the interest of fellow South African companies.
Just look at their areas of operation. Stanbic Bank will have no presence in an area that has no South African companies.
Stanbic off the line of rail and finding itself in the North-western province area of Lumwana! It is not because they want to serve the people of that province. It is because of the mine whose interests are also its interests.
What about Mazabuka in the southern province? Does one need to guess? It is because of Illovo Zambia Sugar.
There is need for Zambian-owned companies and the government to work together in ensuring that the interests of Zambians are better served because, unlike the foreign-owned companies, there is no risk of capital flight.