TA HOLDINGS (TA) executive chairman Shingai Mutasa’s dreams are as big as his frame and from his 14th floor Kopje Plaza office he has a good view of Zimbabwe’s economic and political l
ifeblood — Harare.
Presiding over the sprawling listed investment company for six years now, the pioneering black businessman has not considered anything but profit. But alas, this has not materialised and with each passing day Mutasa and fellow industrialists have seen diminishing value on their investment.
With businesses in the agro-chemicals, hospitality and insurance sectors, Mutasa is a privileged man not only in monetary terms, but he is also strategically positioned to influence matters relating to economic governance.
It is, therefore, noteworthy when one of Reserve Bank of Zimbabwe (RBZ) governor Gideon Gono’s advisors rails at the Zimbabwean authorities’ handling of the economy and how that has affected business performance over the years.
Mutasa might have been rallying the TA cause when he presented his quoted company’s financials last Wednesday, but his candid chairman’s statement about the messy state of the economy highlighted areas that need urgent attention.
Command economics has been a constant fact of daily life in Zimbabwe, but how a country can survive the vagaries of interventionist measures allowing the sale of diesel and petrol at a lower premium than a bottle of mineral water is beyond logic.
Mutasa illustrated how a number of skewed policies have eroded value not only in business terms, but at the consumer level as well.
According to him, the TA group had a market capitalisation of US$50 million in 1997 and attributable profits of nearly US$10 million, but as at December 2003 the market capitalisation had dropped to a mere US$3,9 million.
Its net book value, at US$6 million for the same period, had also fallen nine-fold.
However, the US dollar-value loss contrasts sharply with a 6 000% profit increase, albeit in local currency terms.
This is how the Zimbabwean economy has been performing and one of the country’s coveted companies fared over the past half-decade.
“The national economic decline has been the longest on record propelled by one of the highest rates of inflation combined with currency collapse, high unemployment and the loss of skills,” Mutasa noted, in the TA annuals.
“Each year…the economic decline has been progressively worse than the previous year.”
The TA boss called for deeper engagement and dialogue between business leaders and President Robert Mugabe’s administration.
Whatever 5,7 million Zimbabweans voted for in yesterday’s parliamentary poll, high inflation, at 127%, and other economic ills, remain confounding factors, and a sad reality beyond assembly gains.
The Zimbabwe dollar, trading at an average $6 200 on the regulated auctions, is under serious attack from major currencies and trading at a pathetically low $14 000 to one greenback on the parallel market.
In addition to foreign currency shortages, Zimbabwe’s multi-faceted problems mirror in food, particularly grain shortages, high interest rates, power cuts and an unpredictable fuel supply situation.
Yesterday’s election would usher in a new five-year legislative term but it will not necessarily ease industry’s pains and anxiety over a highly unpredictable economic policy regime.
Industry has been particularly worried about interest and exchange rate issues, and company owners have been running their businesses to the best of their ability given the unpredictable nature of Zimbabwe’s economic direction.
Mining and horticulture, among key exporting industries, were rattled by broader policies governing exchange and interest rate regimes.
Mutasa, among hotel industry investors, decries the woes afflicting Zimbabwe and hints at even more dreary investment consequences.
He said that although TA must, of necessity, look at ways of broadening revenue earnings Africa-wide, it will do so with much caution, especially in Zimbabwe.
“The need to grow TA in real terms is part of the reason for focussing on … opportunities. This will not be exclusive of good local investment opportunities, but it will require a project with outstanding performance to persuade us otherwise,” Mutasa said.
He said the economic reform strategy, spearheaded by the central bank and other key players, was an important signal.
However, it must be executed in a manner that did not exacerbate joblessness and infringed on the rights of fellow Zimbabweans.
Mutasa’s plea “for everyone to respect current legal, ethical and corporate governance” statutes could have been a direct response to the corruption shakeout, mainly in the financial sector. The robust crime-hunt saw the closure of several rogue banks and firms.
But whatever the outcome of yesterday’s voting, it is time, Mutasa believes, for a serious economic re-think on certain facets of the economy such as fuel, electricity tariffs and the exchange rate.