The big boys of corporate Zimbabwe are beginning to squeal like a stuck pig in pain and we should all be worried.
Editor’s Memo Brezh Malaba
They run large companies which pay tax and employ many workers. Their cries cannot be ignored.
A vicious monster is prowling the economic landscape, swallowing entire companies and giving the business community sleepless nights. Who will slay the dragon?
Econet, one of the country’s celebrated bellwether firms, issued a statement which has scared the living daylights out of every self-respecting citizen. The mobile network giant says the electricity crisis is disrupting its operations and harming the business.
Wherever you look, corporate boardrooms in Zimbabwe are being converted to crisis management rooms as companies grapple with a multiplicity of intractable problems in a business environment characterised by heightened uncertainty, fear and anxiety.
Although I am alive to the fact that uncertainty has been a fundamental aspect of decision-making in business management since the beginning of time and is therefore part of corporate reality, you do not need anyone to tell you that the economic situation in this country is nothing short of alarming.
Zimbabwe is reeling from a toxic mix of bad governance, policy uncertainty, structural frailties and runaway corruption.
There is utter mayhem out there. For a moment, imagine yourself in the shoes of a manager who has to make important decisions on how to overcome the electricity crisis. You are running a manufacturing plant paralysed by 18-hour power cuts.
Do you buy a diesel-powered generator? For how much and where do you find the foreign currency? Proper equipment is priced in United States dollars. After buying the generator, you must come to terms with the hassle of finding the money for diesel — if you can locate the fuel in the first place.
Sunny Yi Feng, a company that makes ceramic tiles in Norton, this week told me that it will need 18 000 litres of diesel per day to power its heavy-duty generators. That is more than ZWL$134 000 every single day. Even a gold mill cannot survive this magnitude of bleeding.
The energy crisis has sent the cost of doing business shooting through the roof. Before the escalation of this problem, Zimbabwe was already lagging behind regional peers in facilitating access to electricity, according to the World Bank’s 2019 Ease of Doing Business rankings.
Do the math. A supermarket needs anything between 300 and 1 000 litres of diesel per day. That costs between ZWL$2 200 and ZWL$7 400. To remain in business, such a shop must either increase the prices of goods on its shelves or drastically slash its overheads by, for instance, retrenching — an undesirable outcome in a country with 90% formal unemployment.
As we report today, captains of industry have warned that more companies will close within a month if the government fails to devise immediate solutions to the massive power outages currently gripping the country amid heavy weekly losses ranging between US$150 million and US$200 million as a result of the crisis. There is no greater sign of incompetence and policy failure than a government’s inability to provide public goods. Access to affordable and reliable electricity is one of the markers of socio-economic modernity.
How on earth can Zimbabwe compete for foreign investment when it is failing to guarantee the very basic of services and amenities? In an increasingly competitive world where nations must go the extra mile in enticing investors, some countries are prepared to give a foreign investor not only the land to build upon but also electricity, water and even wifi connectivity. It simply means Zimbabwe cannot compete.
It was the great strategist Sun Tzu who said: “In the midst of chaos, there is also opportunity.”
There is an opportunity to learn from past mistakes, but are our leaders capable of learning? Prolonged chaos is inherently unsustainable — which explains why Sun went on to warn: “There is no instance of a nation benefitting from prolonged warfare.”