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Financial Update – A challenge to the business sector

By Alex Tawanda Magaisa

ONE of the most important facts about Zimbabwe in the last five years is the conspicuous silence and disunity of the business sector.

al, Helvetica, sans-serif”>I use the term “business sector” in the broadest sense, covering farming, commercial and industrial sub-sectors. The business sector is a key constituency in economic development and necessarily places it within a key context for a role in the general affairs of the country. Up to this point, it has at best issued faint whispers and at worst it has maintained an almost conspiratorial muted silence.

It was, therefore, interesting to read a speech that was delivered by Shingi Mutasa, chairman of TA Holdings, at a Zimbabwe National Chamber of Commerce (ZNCC) conference in July. In that speech, kindly availed to me by a colleague, Mutasa admitted that the business sector in Zimbabwe is dysfunctional. It was then that I noticed that even within business circles, key players are beginning to realise certain shortcomings.

There are at least three main weaknesses of the business sector in Zimbabwe. Firstly, the business sector is too disintegrated along corporate and sectoral lines and lacks unity of purpose. Secondly, the business class is highly dependent on the political actors such that their role is at best muted persuasions rather than more visible, audible, independent and open engagements. In addition, the business class is isolated and lacks adequate connections with the rest of society. The result is that as a political and economic constituency, the business sector has remained largely irrelevant and marginal.

The lack of unity partly results from extreme individualism and the narrow pursuit of self-interest, which breeds unnecessarily competitive behaviour, which often borders on sheer jealousy. While competition is a positive element of any free market economy, the competitive behaviour often displayed by African businesspersons is largely at the personal and individual levels. It may not have anything to do with the productivity of one’s business against the other but about whose suit looks better or whose house is bigger and more glamorous.

As an imitation of the more developed and mature business classes in Western democracies, it lacks a solid ideological foundation from which to pursue its goals and strategies. It is why a business executive will spend millions purchasing a fleet of luxury vehicles from Germany, while the business has insufficient inputs for its long-term productive strategies. It is true that business leaders elsewhere are motivated by self-interest but often when their interests as a class are under threat, they often set aside individual pursuits and jealousies to pursue a common agenda. That is why in the UK the Big 4 accounting firms are collectively pursuing a cap on liabilities for negligence to cover themselves against potential future damage claims. In Zimbabwe, the culture of individualism and self-interest has often led to many promising business executives breaching laws and regulations as they engage in corrupt activities. Crucially, it also means that industry associations become weaker and fail to act in the face of challenges.

The second point is that the business class is highly dependent on political actors. This is true in most post-colonial African countries where the policies of affirmative action and black empowerment catapulted a small section of the community into positions of economic power. The gradual replacement of the white corporate leaders by the black counterparts has meant that an emerging black middle class dominates a large part of Zimbabwe’s corporate sector. The lucky ones were able to take control of companies and industries under the guise of black economic empowerment.

The same process that Zimbabwe went through in the 1990s is underway in South Africa today. That is not to say empowerment of the marginalised is bad but problems arise because this business class is highly dependent on political patronage. Business is captured by the state and lacks an independent voice.

The business leaders whose wealth depends on keeping the right connections with the state and politicians are not in a position to challenge irrational policies. The few individuals that have tried to express themselves freely and engage alongside groups of their choice have been dismissed as sell-outs. Indeed, some have had to set bases outside the country for fear of victimisation in the country. Yet, the business class as a whole has not done much to represent the collective interests of its constituents. While in industrialised states the problem is that the state has been captured by business in the developing countries the problem is that business has been captured by the state to the point of becoming useless in the running of national affairs unless it tows the line.

The other problem is that the business class has remained largely isolated from the rest of society and lacks a strong ideological base. Like the political class, the business class only courts the working class and peasants when it needs to drive its agenda. The emergence of the problems that affected most Zimbabweans in the 1990s passed largely unnoticed by the business class. In fact at that time, the emerging business class was consolidating its wealth by taking advantage of the state’s empowerment policies.

Only when the economic rot began to affect business in meaningful ways did the business sector begin to take notice. At the time of the job stayaways of 1998, the business class generally conspired with the working class but only because their wider interests were under threat. Even then, there was no unity within business and workers were never sure about the consequences of their actions. As soon as one enters the business class, he or she wants to achieve the characteristics that depict one as have made it. In order to do that successfully, one has to emerge and distance himself from the rest of society. The tragedy is that this isolates him from the context within which people reside. He will travel to Paris to buy a suit while his workers can barely afford a decent meal.

The widening gap between the small minority that has it all and the majority that has nothing becomes worse and unfortunately, the trappings of luxury create a misleading impression that all is well in the country. He will be slow in reacting to their calls for assistance and will only do so when his self-interest is at risk.

The promulgation of laws that affect the constitutional rights of citizens especially in connection with foreign currency dealings has been largely seen as a measure directed towards the business sector that was seen to be out of control. As a result, a number of businessmen are either in jail or have fled to other countries in fear of the laws. The industry associations have been conspicuous by their silence even though it has been widely argued that the constitutionality of those laws is in doubt. In any country with a developed and mature business sector one would have expected organisations such as the Confederation of Zimbabwe Industries, ZNCC, and Bankers Association of Zimbabwe (Baz) to have raised vocal concerns to represent their members interests. Perhaps it is such shortcomings that have led to the formation of splinter organisations. Given all the problems affecting the banking sector, and the enforced flight of some executives and the silence of Baz, one wonders whether such an organisation is just a window-dresser.

In any other country, one would have had such an organisation taking a more visible role in trying to mediate a solution that is more reasonable and positive. As it is, the atmosphere of uncertainty, fear of victimisation amid a climate of no representation will continue to drive people out, taking with them not only financial resources but also skills as they settle in new territories where like farmers now in Nigeria and Zambia, they will be welcomed with open arms. Both business and the nation lose out to this resource haemorrhage.

That is not to say that all professionals in business have always been silent. Some organisations have been pro-active to protect the collective interests of members. For example the Law Society of Zimbabwe has previously taken the state to court over laws that were deemed to be unconstitutional. Similarly the celebrated case of Nyambirai v NSSA in 1995 challenging the constitutionality of compulsory contributions to NSSA demonstrates the capacity of professional individuals to pursue public interest litigation for the benefit of the public. In addition, organisations such as the Commercial Farmers Union went to great lengths to represent and protect the collective interests of their members.

However, they got very little support from the rest of the business community despite the litigation that they were pursuing was of both public and commercial significance. Business can do better by harnessing its potential and beginning to fully participate in the affairs of the country. Every constituency fights for its rights and interests and the more it is united and focussed the better. The same cause that drove workers working in different organisation to form trade unions should motivate companies to come together and take more decisive action to protect its rights. It is important to promote the work ethic revolving around teamwork and collective interests. As Mutasa stated in his speech, right now a large portion of the country’s wealth – both intellectual and financial – is residing outside the country. That is not to say that the business sector must necessarily adopt an anti-state approach. However, it must become more organised, integrated and focussed on its capacity to represent its interests from a collective standpoint.

Surely, there should be a way to negotiate a better approach to deal with the problems facing the nation rather than driving them out with laws. Again, as Mutasa rightly pointed out, business must devote more time and financial resources to the industry associations but additionally, the associations must become more pro-active and engaging rather than remaining distant, only to be heard during annual meetings in plush environments.

Unless a constituency is properly represented, it will remain irrelevant and marginal. Plagued by petty-jealousy, political dependence and isolation, the business sector has been largely irrelevant in the periphery of national affairs. Even as its constituents have come under increasing pressure, this sector has failed to effect proper representation. It must become more involved; otherwise sooner than we thought it will disappear into oblivion.

* Alex Tawanda Magaisa is Baker & McKenzie Lecturer in Corporate & Commercial Law at The University of Nottingham. Contact: alex.magaisa@nottingham.ac.uk

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