DIRECTORS’ REPORT
FOR THE SIXTEEN MONTHS ENDED 30 JUNE 2023 CORPORATE GOVERNANCE STATEMENT
These financial statements are the responsibility of the Directors. This responsibility includes the setting up of internal control and risk management processes which are monitored independently. The information contained in these audited financial statements has been prepared on the going concern basis and is in accordance with the provisions of the Companies and Other Business Entities Act (Chapter 24.31), the Microfinance Act (Chapter 24:29) and the International Financial Reporting Standards.
The Board of Directors will conduct an annual self-evaluation to determine whether it and its committees are functioning effectively. The Human Resources Committee will receive comments from all Directors and report annually to the Board with an assessment of the Board’s performance. The assessment will be discussed with the full Board each year. The assessment will focus on the Board’s contribution to the Company and specifically focus on areas in which the Board or management believes that the Board could improve.
Each standing Committee, shall review and reassess the adequacy of its charter annually and recommend any proposed changes to the Board of Directors for approval. Further, each standing Committee, shall annually review its own performance and report the results to the Board. The Nominating and Corporate Governance Committee shall oversee and report annually to the Board its assessment of each Committee’s performance evaluation process.
Developments
InnBucks MicroBank Limited corporate governance practices are stipulated by the Microfinance Act (Chapter 24:29). The Board has set up the Audit and Finance Committee, Human Resource Committee, Credit Committee, Informational Technology Governance Committee, Loans Review Committee, Risk and Compliance Committee to assist in the discharge of its duties and responsibilities. The following mandates apply to the relevant Board Committees:
IT Governance committee
To assist the Board in its oversight of technology related matters and initiatives by helping to ensure that the Bank always has robust infrastructure and capabilities in place, follows best practices in the management and utilization of those capabilities and maintains alignment with the Bank’s Strategic Business Plan and Statement of Risk Appetite.
Audit and finance committee
To provide independent review and oversight of the Company’s financial reporting process, the system of internal control and management of financial risks, and the audit process.
Credit committee
To carry out the Board’s overall responsibility with respect to lending and is mainly responsible for considering and approving credit facilities beyond the discretionary limits of the management committees as mandated by the Board.
Human resources committee
To investigate issues relating to the formulation and approval of strategies and policies relating to the remuneration, terms and conditions of services of all bank staff. Broadly the Committee is mandated to;
a) Provide assistance in respect to the membership and performance of the Board to accomplish the objectives of good governance through evaluation and development
b) of the Bank’s governance practice, addressing transparency, Independence, accountability, fiduciary responsibilities and management oversight;
c) Succession planning and employment terms for the CEO and Senior Executives;
d)The remuneration policy and remuneration structures;
e) The remuneration arrangements for non-executive directors, executive management and other designated employees;
f) The development, retention, wellbeing and safety of all Bank’s employees;
g)The Board’s corporate governance framework, policies and practices.
Loans review committee
To oversee the credit and lending strategies and objectives of the Bank, including: (i) to oversee the credit risk management of the Bank, including reviewing internal credit policies and establishing portfolio limits; and (ii) to review the quality and performance of the Bank’s credit portfolio. The Committee shall also be responsible for any other matters delegated to it by the Board.
Risk and compliance committee
Has responsibility for oversight and providing advice to the Board on risk governance, the current risk exposures and future risk strategy, including strategy for capital and liquidity management, the setting of compliance policies and principles and the embedding and maintenance of a supportive culture in relation to the management of risk and compliance. The BRCC supports the Board in carrying out its responsibilities of ensuring that risks are properly identified, reported, assessed, and controlled, and that the Institution is operating in line with its approved Risk Appetite.
The Board has also appointed management committees to assist in the execution of its mandate namely, the Asset and Liability Committee (ALCO), Management Credit Committee, Procurement committee, Enterprise Risk Management Committee, Information Technology Steering Committee and the Executive Committee.
During the period under review there were no corporate governance developments with the exception of the resignation of the Chief Executive Officer (CEO) Mr Llody Borerwe. The role of the CEO was temporarily assumed by Mr Petros Singano the Chief Finance Officer who also resigned effective 31 March 2023. RBZ has been advised of the changes including the appointment of Ms Daisy Zinyemba as the Chief Executive Officer effective 1 May 2023.
Regulatory Compliance Statement
In compliance with the requirements set out in the Microfinance Act, Guidelines and other applicable laws governing the institution, the Board confirms its commitment to ensuring adherence to laws, regulations, procedures, processes and controls and confirms that such culture is being instilled in every staff member of the Innbucks. The board shall continuously ensure that there is an appropriate structure in place for identifying, monitoring and managing compliance risk and necessary feedback is obtained for an effective monitoring on a timely basis.
For the sixteen months ended 30 June 2023, the MicroBank partially complied with the relevant regulatory requirements. Where it has been partially - compliant, the Institution has taken all reasonable steps to ensure compliance. In particular, the MicroBank was not able to:
- Publish both its interim financial statements for the period ended 31 December 2022 and its full year financial statements for the period ended 30 June 2023 per the requirements of the Reserve Bank of Zimbabwe’s operational guidelines affecting microfinance institutions due to the accounting difficulties on the application of IAS 29 “Financial Reporting in Hyperinflationary Economies” which resulted in further work being performed and additional time being taken beyond the stipulated time frame. The Half year financial statements for the period ended 31 December 2022 were due for publication 60 days after the reporting date whilst the financial statements for the full financial period ended 30 June 2023 where due to be published 90 days after the reporting date.
- Comply with the requirements of IFRS 9 “Financial Instruments” which requires financial instruments to be carried at fair value in the case of our Savings Bond holdings (Investment Securities). This conrequirements sequently resulted in the overstatement of core capital per the requirements of the Reserve Bank of Zimbabwe.
Comply with the minimum regulatory capital of a ZWL amount equivalent to US$5 Million. The MicroBank’s total capital base amounted to ZWL14 840 934 250 as at 30 June 2023 which translated to US$2 585 620 and is below the regulatory levels as required by the Reserve Bank of Zimbabwe (Refer to ’note 33.2.10).
The financial statements are therefore, prepared with the aim of complying fully with International Financial Reporting Standards (IFRSs) and have been prepared in compliance with the Companies and Other Business Entities Act [Chapter 24:31].
The Board of InnBucks has a unitary structure and functions as an authoritative decision-making body and meets regularly as required and periodically monitors the performance of the executive and Management. For the period March 2022 to 30 June 2022, the Board sat twice due to the structural changes that were ongoing. All issues pertaining to composition have been rectified.
All the Directors possess expertise and experience in relevant areas such as Accountancy, law, Risk Management and Banking. The Board collectively and the Directors individually are fully involved in the Bank’s affairs and adhere to the highest ethical standards. The Directors are elected to hold Office until expiration of their term of office and are eligible for re-election as provided by the InnBucks Board Charter. The Chairperson of the Board is a Non-Executive Director. Below is the information pertaining to the Board (as at 30 June 2023).