THIS year the theme of the Zimbabwe Independent’s Quoted Companies Survey was “Persevering Beyond Survival”, demonstrated by the graphic
on the cover of our recent special magazine of a climber struggling up a rockface.
The climber is hanging on precariously, trying to defy the laws of gravity. He has two options at this stage: to abandon the tortuous task of continuing up or to use the rope and abseil down to the safer surface at the
foot of the rock.
In this difficult operating environment there are companies which have elected to cling to the rockface and continue trying to go up, albeit painfully.
Rock-climbing is basically applied physics. Grace, rhythm, balance, concentration, and flexibility count more than strength. Incorrect techniques, bad weather, and misuse of equipment can produce some dangerous situations hence proper procedures must be followed. Other than guile, biomechanics are crucial to climbing. Bones, joints, and muscles combine to provide wedges and levers: all the simple tools necessary to make it to the top.
The most sophisticated climbing “gadget” is the human hand. Hand jams allow climbers to grab holds in seemingly impossible places. Zimbabwe’s businesses are hanging on. In this setting, it is not necessarily the strongest that will get to the top but those with the shared attributes of a rock climber: grace, rhythm, balance, concentration and flexibility. However, inclement conditions have in the past seven years posed a huge challenge even to the best climbers. To beat adverse conditions others are learning to adapt and there are a lot that have decided to misuse equipment at their disposal or tried to take shortcuts. They have fallen off the rockface.
Zimbabwe is in the vortex of a treacherous cycle in which government is clutching at straws to extricate the country from a current record low characterised by four digit inflation, volatile and fast depreciating exchange rates and high interest rates. Policy inconsistencies and macroeconomic instability have undermined investor and issuer confidence,thus dampening business flow to stock exchange listed companies.
Do we still remember the presidential pronouncement that 2005 was a year of investment? Listed companies featured in the Independent’s latest Quoted Companies Survey all reported, as if on cue, on “challenges” they are facing in the course of trying to do business. The challenges have become commonplace akin to a nursery rhyme.
What is however very evident is the fact that this economy is crying out for new capital to keep current industries going, bring them back to high productivity and revive those on the verge of falling off the cliff.
The state of our manufacturing sector is cause for great concern. Capacity utilisation has gone down to below 50%, according to a CZI study published early in the year. Jobs are being lost and the country has lost its competitive edge as an exporter.
The problem is a shortage of foreign currency and predictability in policy formulation. Attempts to revive the manufacturing sector through the Public Sector Facility have not helped boost productivity. And printing more notes to pay workers will not improve human development. In such a situation President Mugabe’s wish to attract investment is doomed, especially when there is no predictable programme on the table to attract investors.
More worrying is the fact they will not be attracted by the proposed new mining policy; nor will they want to do business in a country where property rights are constantly under threat. Bilateral agreements are being violated with impunity, despite promises these would be respected.
Big business represented by companies listed on the stock exchange are all hurting despite the huge sums on the bottom lines of their results.
The figures do not mean much to the legion of the unemployed as long as firms fail to create new jobs or introduce new product lines or invest in new technology. The absence of many big companies from this year’s
Zimbabwe International Trade Fair is evidence of the state of our economy.
Should we not be asking questions why parliament, of all institutions, should be exhibiting at a trade promotion fair while big manufacturers stayed home? It is no longer just a question of affordability to exhibit but that of confidence too. There is no use in displaying export products at a fairinternational buyers do not attend.
As I said in the foreword to last year’s Zimbabwe Quoted Companies Survey, Zimbabwe needs friends who can make a difference. But to achieve that, the political leadership must commit itself to doing basic things right in the management of this economy. Perhaps the starting point would be to master the basic definition of economics.
Lesson one: Economics is the study of the choices people make to cope with scarcity. Sounds familiar. Lesson two: Economic growth is the expansion of production possibilities that results from capital accumulation and technological change and not the number of zeros on workers’ salaries. We believe our annual surveys help stakeholders get greater insight into the state of big business in Zimbabwe and the resonating effect on the
We are grateful to African Banking Corporation for their support once again in making this product possible. It can only be through such partnerships that we continue to encourage each other to focus on the goal of reaching the top by first avoiding the fall.