Zamzam starts selling shares

Zamzam Bank share sell attracts several including the diaspora, who is privileged on the latest law to participate in the finance industry.
As of Friday June 21 the bank that was the first for interest free banking has offered one billion birr worth of share sells.
According to Nassir Dino, who is one of the organizing committee members, the interest of the public to get shares on Zamzam is very high. “As of the beginning we have attracted several interested potential investors locally and the diaspora,” he said.
If the bank sell shares for Ethiopian born foreign citizens it would be the first since the government allow them to invest on the sector.
The bank has offer one billion birr worth of capital with half to be paid that would meet the requirement of the National Bank of Ethiopia (NBE), the financial regulatory body. A bank needs to fill a half billion birr paid up capital to start business.
The minimum share an individual shall buy at Zamzam is 50 with 1,000 birr each shares, while the maximum is limited by NBE that cannot not exceeded 5 percent of the total capital. In this case an individual can buy 50 million birr worth of shares at Zamzam.
“Our plan is to undertake the general assembly in the New Year and start operation as soon as possible,” Nassir told Capital.
He explained that the former shareholders who were refunded their capital when the bank went defunct, would be free from service charge if they buy the share now.
The under formation bank would charge three percent on very share sales. However for the share buyers who buy more than five million birr the service charge will be two percent.
According to Nassir, share buyers are at least expected to settle half their subscription.
Initially Zamzam introduced its activity immediately after the Banking Business Proclamation authorizing the establishment of interest-free banking in 2008, and sealed the formation process by the general assembly held in April 2011 but failed to commence operation after the central bank issued a new directive that push the operation to conventional banks.
Due to that the board directors who meet with shareholders in June 2011 decided to refund the mobilized capital for shareholders based on the interest of the share buyers.
On its share sales the company was able to amass an actual collection of 330 million birr as subscription, which was higher compared with the initial plan to collect quarter of a billion birr. At the time about 6,800 people buy the share that was 20 shares on minimum requirement with 1,000 birr share value.
During a meeting held on Wednesday May 22, between the organizing committee members of Zamzam and Central Bank officials, Yinager Dessie, Governor of NBE, allowed Zamzam to undertake the formation process. The green light came on the same day that PM Abiy Ahmed announced that the government will allow interest free banking in the country.
“We will open branches in every major cities in all regions as soon as we conclude the formation process,” Nassir said on the future plan of Zamzam.
“Besides that we are highly interested to make the bank a citizen’s bank and everybody should benefit from it,” he added.
The bank has also a 3 percent social fund that will be invested on social development in the society.
“From the service charge in the previous share sells we were able to include 160 people as a shareholder on the social contribution. Now the social fund that would be managed by Zamzam Foundation would provide several supports for the society that might support the health sector, education or providing as seed money for young entrepreneurs,” one of the founder of the bank said.
He said that today some people may not have the finance to join the bank but they shall provide support intellectually. “Our target is not only making shareholders reach more but such kind of social contribution concepts shall be entertained on our activity,” he explained.
Experts stated that such banking activity needs more skilled labour since it is new for the country, while other banks operates it as a single window service.