THE emergence of the economic recession and the subsequent inflationary conditions that followed as far back as 2000 initially presented readjustment pro
blems for the larger segment of the Zimbabwean population that had become accustomed to a stable economic environment.
Prior to the economic recession, the majority of Zimbabweans excelled throughout their early schooling and later in tertiary education with the ultimate objective of securing well-paying jobs that guaranteed financial emancipation.
Savings were subsequently made and invested on a fairly regular basis into structured investments for posterity and to provide financial security for other generations. The advent of the economic recession turned this financial comfort zone upside down through the erosion of savings and salaries due to the effects of hyperinflation.
Understandably, as part of the survival strategy under the new dispensation people devised various techniques, most of which were crafted to take advantage of massive distortions that had arisen in the economic trading environment because of policy inconsistencies on the part of government.
The get rich quick wheeler dealers who made massive margins on foreign currency transactions without producing a single consumable product became the order of the day and the envy of many outside the sacred circle.
No particular skills were required to expedite the deals except for one to be connected and have the guts to trade in an illegal market.
The less fortunate who had no access to this lucrative market but could not bear the option of living in abject poverty through earning an inflation ravaged wage decided to ply their trade in the informal sector.
Nothing much was required to set up the informal businesses as little capital was invested to initiate operations and little was required in the form of working capital. The informal sector became an important investment tool for the lower end of the market allowing it to keep up with inflation in line with other classes.
On the other hand, those who remained in formal employment were negatively affected by sub-economic salaries and consequently engaged in unethical dealings within their work places to earn an extra dollar as a way of keeping up with everyone else.
Many others migrated legally and illegally to various regional and international countries to earn the much sought after foreign currency as a way of providing a safety-net for relatives left behind in Zimbabwe.
By and large, Zimbabweans across the class divide had readjusted through these various methods to the changed circumstances. These survival techniques were necessary but temporary in nature.
Temporary as they may have been, Zimbabweans across the class divide had to some extent altered their lives permanently, in a way compromising their possible re-integration to the economy post economic recession.
Hence, the question that keeps lingering in the minds of visionaries is: After eight years of economic recession is the economic tide about to turn necessitating further re-adjustment of strategy to enable adaptation in line with further changed circumstances and how prepared are Zimbabweans? Arguably, determining with precision when Zimbabwe will come out of this economic recession is anyone’s guess and most likely a topic for political debate. However, in a moving article written by Mutumwa Mawere entitled Unpacking the ENG saga three years on, he indicates that only an idiot does not see the signs that Zimbabwe is on the verge of change.
Perhaps this might explain the decision by LonZim, an international investment firm to plough in $30 million at this particular point in Zimbabwe, positioning itself for post economic recession.
Many proponents of this view also point to the tide of change in South African politics and the current unraveling political crisis in Kenya as mythical signs that Zimbabwe could be next. Whether these assertions will turn out to be true or false prophesies is only a question of time.
In the event that economic recovery does come Zimbabwe’s way: Are Zimbabweans well positioned to benefit from the anticipated change? To adequately address this question, an analysis of the investment strategies used during economic recession and the relevance of those investment strategies post economic recession by the different segments of the Zimbabwean populace might give an insight.
Firstly, we have the get rich quick wheeler dealers who trade on the parallel market and make their living from earning massive margins on foreign currency transactions. These individuals have set themselves apart from the rest by making huge profits over a relatively short period of time and invested in properties, cars, and hard currencies.
Their skill’s base is rather limited and they survive on connections that guarantee continuous business. Post economic recession, distortions allowing parallel market dealings to occur will disappear leaving no prospects for wheeling and dealing.
While the investments made by wheelers and dealers make sense, post economic recession this group has not set itself up to be major players in the economic trading environment.
No investments have been made towards infrastructure development, brand building, and setting up corporate structures that can last for centuries to come. For instance, while someone can make money and invest in a car, someone else would rather put that money towards building a corporate image and a brand equivalent to Coca-Cola over time.
It’s a trade-off between short-term profits and empire building in the long term. Post economic recession it is expected that the trading environment will be dominated by global brands and multinational companies with international lines of credit.
In addition, the wheelers and dealers will find it difficult to secure formal employment in multinational companies post economic recession because during economic recession they have not made any efforts to further their education and professional skills.
Secondly, we have the informal sector made up of entrepreneurs who set up undercapitalized operations during economic recession.
Many of these informal entities will never grow beyond what they are and thrive on evading tax officials and operating outside government regulations. Post economic recession these undercapitalized operations will not be able to withstand the competitive trading environment dominated by big businesses and will most probably be swallowed up and shut down voluntarily.
For those that will be lucky they might just survive through offering a highly targeted niche market strategy. In addition, there will be no price distortions to allow informal traders to earn huge margins on just buying and selling as is the trend now. This group will also have no option but to be re-engaged to the job market and be re-trained to acquire the relevant skills.
Thirdly, we have the Zimbabweans in the Diaspora who left the country during the economic recession, most of whom work outside their professional areas of study in the foreign countries. Most people in this category send money to their relatives back home on a fairly frequent basis and hardly have significant investments that can rival multinational companies post economic recession.
Some in this category might want to come back to Zimbabwe post-economic recession and be re-engaged in their professional capacities but might find it difficult because in the Diaspora most of them were not gainfully engaged in their fields of original study. This presents a future predicament.
In essence, Zimbabweans are ill-prepared for the period post-economic recession. There is a serious generational skills gap caused by the economic recession that will compromise the ability of most Zimbabweans that got into wheeling and dealing without getting formal job and professional training. These skills will be necessary post- economic recession as the trading environment will cease to be dominated by short-term deals promoted by market distortions.
That is why it is imperative that Zimbabweans think of investment strategies now that will rival multinational companies post-economic recession. The concept of wheeling and dealing will have to be traded off with corporate building through channeling financial resources towards brands and infrastructure development for the long term.
* Nhlanhla Nyathi is a director of a private equity firm. He can be contacted on 0912250092.