Zim trip update part (ii)

Posted on 04/07/2010

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Early last week by chance (or God inspired as I put it) I happened to be in one watering hole in Harare. The strategy was to sit down and brainstorm with M Snr (Dad). I had spent the day in various meetings gathering information and tonight I was in fact preparing for an important bank meeting the following day. I came across a gentleman, who funnily enough is included in my Sir Nigel’s ‘Who is who’ of Zimbabwe (still a work in progress but coming along nicely).Anyway this particular gentleman is a banker or sorts and probably not the one we’re all thinking of either. He spoke at great length whilst we shared a bottle of red wine. He initially asked about my background and of course I told him. He rattled on about my generation and our need to carpe diem – ‘seize the day’. You see, he like I believe that Zimbabwe is on the cusp of something extraordinary. We spoke about the current business environment, the challenges and the opportunities that exist now and in the future. Needless to say I gained much insight from our discussion that night. Call it what you will but meeting him that day was no accident at all.

The next morning I attended a breakfast Rotary meeting with M. Snr in town. I’ve been to these breakfast meetings before of course, but now my mindset has shifted somewhat – I listen more and try to ask pertinent questions. The discussion revolved around ‘retrenchment’ and the challenges associated with that in Zimbabwe right now. On the various trips home, I have always spoken about the high number of airport staff members I see as I pick up my luggage at Harare International Airport (anyone else see this or is this just me?). Anyway, the issue of retrenchment has been thrown in many business discussions recently as companies and various organisations attempt to make strides in operating sustainable businesses. You will recall the hyperinflationary days (how can we forget those days?). By the way, the key word here is ‘sustainable’. Years later with improvements in technology and business practice among other things, companies now have to face the reality that many are in fact ‘over-staffed’. There are recent and high profile cases to illustrate my point – Air Zimbabwe is one such organisation with some 400 odd staff member earmarked to go and in fact the case is currently being dealt with by the courts. Generally speaking, retrenchment in Zim involves a laborious process where an application is submitted to the relevant authorities with the usual supporting documentation etc. I would go into the detail but the little I know typically involves: – a notice period for the individual (s) of 3 months. There is a calculation for the severance payment typically based upon the number of years served but we’ll leave that for the HR guys. Essentially the current laws make it harder and extremely costly to retrench staff even if it’s in the best interests of the entire organisation. Organisations are grappling with this reality and for the mean time are stuck in a catch 22 situation. Do you retrench the 400 odd staff in an attempt to run a sustainable business (which requires further investment or a partner either way as is the case with Air Zim) and leave a massive whole in the coffers or do you ignore the monthly wage bill and therefore prolong the evitable? Tough choices lie ahead for businesses in Zimbabwe. I suspect the business community and relevant authorities will sit down to address this in due course – I hope this happens very soon.

A few weeks ago I was doing some bedtime reading as I tend to do most nights. Interestingly enough, on this occasion I was reading TA Holdings’ financial statements (as you do) with particular interest to the Chairman’s Statement. Shingai Mutasa (another on my list of Sir Nigel’s ‘Who is who’ of Zimbabwe) wrote about how today’s managers needed to adjust to the current business environment i.e. lower margins and the USD currency situation. Apparently and according to others I’ve spoken to, the last 10 years have seen some managers become ‘dealers’ instead of managing the 2, 3 or 5 year financial projections set out by their respective businesses. I spoke to several business owners and managers about this pertinent issue. Was it true that some managers had become ‘dealers’? I guess the short and easy answer is yes. Imagine converting say USD$100 into Zim dollars and running your whole business on that all month. Imagine hunting down raw materials and finding them over-priced somewhere. So you stock up and only produce minimal amounts whilst holding onto the remaining raw materials (remember in hyperinflationary times it is best to hold your ‘cash’ in some asset, in this case the actual raw materials). I know firsthand the challenges of shifting one’s mindset from this abovementioned scenario to the current status quo. I spoke to one individual who suggested that the seemingly high movement of senior managers from this organisation to the next was as a direct result of this need to ‘refresh’ teams in an attempt to address this very issue. I found that very interesting and will continue to monitor the situation closely.

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