It’s Not Just The Politics That Has Ruined The Zimbabwean Economy

THE Zimbabwe Independent (July 11 – 17) ran an article on how insurance company management, pension fund management, regulatory management, actuarial management and asset management constitute a black hole for public social security investments.

A direct consequence of this mismanagement-induced black hole is the destitution among pensioners and destitution when other social ills like death, ill-health, disability and so on strike.

This destitution, among other symptoms, is really a manifestation of an economy that is not performing –– in this case as a consequence of mismanagement by management types mentioned above. Simply put the said management are, in aggregate incapable of investing in matching investments and infrastructure, to mitigate the destitution, investments like real terms investment, investments in hospitals and so on.

It turns out that it is not the only economic sector where economically damaging management malpractices such as these abound. If the commentary responses received by the author in support of discussions made herein this article and comments to chastise business malpractices in general are anything to go by, management malpractices and incompetence is rampant in Zimbabwe. It therefore turns out that it is not just the politics and government that’s holding a strangle on the economy, management malpractices and incompetence are contributing to the economic malaise with a veiled force just as severe as the political strangle.

To turn to the comments in corroboration, the one comment from as far afield as the USA gave specifics on how some insurance operating in Zimbabwe had actually defrauded the public in the process sustaining the downward spiral of the economy. The most interesting emotive feedback poured their heart out lamenting how a clique of business executive management have done the rounds over the years, in institutions within the bounds of Harare picking up Mercs, Prados, and other such executive cars that revert to their ownership while effectively destroying value in the said institutions –– they have nothing tangible or proven to show for being in their positions for so long, except for being there in the positions “ceremoniously”. It is alleged that their technique to get into, and keep in the clique is simple –– get a few public eulogies in the press or elsewhere for qualifying in something or being promoted/appointed to something “important”, keep a “work program” of meetings that keeps you away or shields you from the real work of planning and executing that all executives should do, keep the image right by going to golf clubs and stuff.

Yeah right have you regularly called an executive and consistently received an answer to the effect “I am in a meeting”!; and have you called into their offices and found them struggling with the laptops –– just computer illiterate! However and thereafter, it’s smooth sailing as a “professional worker” as one comment had it. If you are in the know and engage them, and they figure out you have caught up with them –– they point a finger at the politics and government. In the meantime the latest Mercs, Prados and other such executive cars keep being rolled out into Harare’s streets irrespective of the bad economic circumstances that they are probably responsible for –– “have you heard people say ‘That’s Mr so-&-so’s Prado –– he is big at XYZ institution; and ‘Oh that one is Mrs H’s Merc – –you don’t mess with her at ABC institution” This apparently will be in reference to the highly and publicly visible but allegedly incompetent clique. Fancy what impact this divisive management strategy has on the economy in aggregate.

It is difficult to ignore the veracity of such outpourings when one observes that indeed that same clique has not significantly been affected by the economic melt-down. Notwithstanding the competent performance of a handful of executives that are well known to have kept their institutions buoyant, the clique in question survive primarily because boards and shareholders will take whatever they are told, because more often than not, these same boards will not have the expertise and infrastructure to assess and monitor performance of the incumbent management.

Even the competent executives fall for it, and contract incompetent executives in their ranks. It’s only after two –– three years down the line, often more, when visible institutional value lost via the incumbent executive becomes apparent, that the board and shareholders are forced to act. In the circumstances, the technique on the part of the executive is to slip out of that institution “quietly” and “prey” on the next institution — often using the clique as a networking tool. In some instances the incompetent executive stays on for ‘life’ because they put in structures in the boards that enable them to consistently manipulate the boards. In this entire process they preclude the competent, the younger more energetic and talented stock from doing anything, pretty much “hogging” the way for the latter –– hence the massive unemployment rate of these younger groups.

Public emotions regarding this the said social security black hole and other business malpractices are swelling inside –– the public just doesn’t know how to probe this problem for a variety of reasons ranging from a lack of appreciation of how management in these various sectors should work to counter actions by management to frustrate any such efforts.

The only way out for Zimbabwe to root out incompetent management is to use regular appropriate quantitative management performance measurement coupled with qualitative performance measures in the boards. This will require appropriate corporate governance infrastructures including skilled audit committees to assess the efficiency of business processes. Objective and appropriately skilled commissions of enquiries should occasionally be instituted when it is believed that there are widespread problems such as the perceived “pensions and insurance black holes”.

Civil society and other pressure groups should be brought to bear on incompetent management that adversely affects the public. Indeed this has worked elsewhere internationally — witness the Equitable in the UK when management sought to short-change policyholders, the pensions mis-selling in the UK again when the pensions subscribing public would have lost pension benefits from mis-selling by pensions providers. In each case management caught out, paid dearly and the incoming management have to think twice. This is just to give examples in the insurance and pensions industry. This can be applied in all economic sectors.

l Tarusenga is Principal Consultant with Systemics Consulting; contact — Mtarusenga@aol.com, Tel: 091 889 716; 04 2931019

 

Top