The Covid-19 pandemic has brought about unprecedented economic and business realities which will be felt for years to come.
Despite vaccines emerging, it is highly unlikely that many African countries will be able to access the high quality vaccines early enough, hence their economies face a bumpy road ahead.
According to Mckinsey (2020), many companies and institutions face deep financial and business uncertainty. Without a strategic shift, many companies and businesses in Zimbabwe face a fractured future unless they recalibrate now. This article reflects my earlier warning in my article “Bumpy road ahead of Zimbabwe Economy” published in this paper in April 2020. Further, I warned that businesses should not be “sleep walking” to believe all things will go back to where they left them (Whittington, 2020). As such, this article builds from that background by sharing a critical perspective on recalibrating businesses in Zimbabwe for potential opportunities during and post-Covid-19.
It is certain that the pandemic brought about the urgent need to restructure and reconfigure the business and economic order. The prevailing second wave and the new variant both pose economic threats for many African countries.
According to the International Monetary Fund (IMF), global output fell to -4,4 % by October 2020 (IMF, 2020) posing unprecedented economic consequences. While the pandemic carries many emotions, Vusi Thembekwayo (2020) once encouraged that we need to “choose progress than emotions”.
In this regard, businesses in Zimbabwe need to be pre-occupied with recalibrating to fill gaps in global supply chains disrupted by Covid-19. However, corporate sustainability has emerged as a determinant for global market entry. Sustainability requires companies to embed and manage economic, environmental and social and governance issues in their business practices to guarantee that their products and services comply with sustainability standards expected in global supply chains going forward.
Sustainable business practices
The pandemic has really tested the resilience of many companies in Zimbabwe, with the second wave being more fatal. Many companies in Zimbabwe (large and small) have been operating on unsustainable business models and practices. The pandemic has reminded many companies that sustainability should have been prioritised in their business strategy and leadership philosophy.
Sustainability has become an important determinant for consumers, suppliers and leading organisations. Sustainability in supply chain management refers to transparency and accountability on risks and negative impacts from economic, environmental, social and governance of a company supplying goods or services. In this regard, Zimbabwean companies wishing to enter global supply chains should prepare to demonstrate their sustainability practices (Clegg, 2011).
Companies in Zimbabwe need to improve on sustainable business practices by embedding and managing economic, environmental, social and governance issues (Hitchcock and Willard (2006). Observations on sustainable business practices have shown that many companies are vulnerable to international competition and the Africa Continental Free Trade Area (ACFTA).
Further, investors considering Zimbabwe tend to be concerned with human rights in business, corruption, stakeholder relations, occupational health and safety, environmental impacts, social practices and corporate governance. Consequently, these are the same issues global supply chains screen with ISO20400-Sustainable Procurement (CIPS, 2020). Given the low levels of ISO Certifications on many products and services in Zimbabwe, it will be a challenge to enter global supply chains.
Improving corporate governance
The corporate governance profile of Zimbabwean companies remains risky for responsible investors. It is no secret that many companies struggle to meet corporate governance indicators and board sustainability profiles.
In many cases, you will find that majority of the board members are accountants with the same qualification reflecting lack of board skills diversity and in some cases gender equity. According to Sustainability Boards Report 2020, many company boards lack Environmental, Social and Governance (ESG) expertise.
A good board of directors should have a balance of skills reflecting economic (business, finance, marketing etc.), environmental, social (labour, community etc.) and governance (legal, company secretarial etc.). The Global Reporting Initiatives (GRI) provides standards for benchmarking on sustainability indicators used globally (KPMG, 2020).
Sustainability management in business enterprises has both functional and institutional value creation for successful businesses that differentiate themselves (Schaltegger et al, 2002; Porter, 1990; Scholes et al, 2008). Despite, the existence of Statutory Instrument (SI) 134 of 2019 (Section 399 — 404), the National Code on Corporate Governance Zimbabwe (ZIMCODE) (Section 5) and King IV Code of Corporate Governance of South Africa, many companies in Zimbabwe lack documented Sustainability Policies even Strategy.
Unfortunately, global companies have used their sustainability leadership and practices to dominate global markets. For example, Unilever, L O’Real, HP, Nestle, Coca Cola and even Microsoft which has also joined the sustainability trail lately. As such, it is upon companies in Zimbabwe to take corporate sustainability seriously.
Post-Covid-19 business opportunities
Global supply chains have been disrupted by the pandemic. It is certain that manufacturing, agriculture, mining and infrastructure development will be key to restart many economies post the pandemic.
Food production to meet global demand will be an opportunity for agro-based economies like Zimbabwe.
However, companies in this sector whether large or small, will need to demonstrate ESG standards to penetrate global supply chains largely affected by the pandemic. Right now, Zimbabwe should be strategically recalibrating its manufacturing and production capacities before it soon becomes a market for others.
Many economies in Africa are driven by Small and Medium Enterprises (SMEs) including Zimbabwe. However, without a clear national model or strategy for linking small companies with large companies who export to global markets, many SMEs will go out of business. Government should develop a supply chain linkage model linking small producers with large producers using Special Economic Zones (Sez).
This model has been successful in East Asia (South Korea, Japan, Singapore, Hong Kong, Vietnam and China). For example, small farmers produce and supply a large company in the same sector which then exports to global markets while ensuring the production meets sustainability and international standards.
The pandemic has brought many lessons and opportunities for innovative and progressive businesses and leaders. For example, technology has been driving business during this pandemic. As such, technology companies in Zimbabwe should innovate e-business solutions to support small businesses. While the pandemic provides current and future business opportunities, there are challenges that business need to prepare for.
With the US returning to the Paris Agreement, it is likely that climate change will soon become a business barrier for those still holding on to old technology and equipment associated with high Greenhouse Gas (GHG) emissions. As such, companies in Zimbabwe need to start investing in new low emission and less energy intense technology and equipment. Climate change will rise again on the agenda post the pandemic, therefore, the use of clean energy will soon become a business imperative.
Sustainability presents the biggest opportunity for businesses in Zimbabwe to recover and reboot the national economy.
However, companies, whether small or large, should adopt corporate sustainability practices if they have a chance of attracting sustainable capital and investors.
Many investors, international banks and capital markets have adopted sustainability standards and guidelines for assessing companies before injecting any financial capital. Recently, many banks signed up to the Principles on Responsible Banking (PRB) in which sustainability defines the business relationship and services.
Lastly, if business leaders in Zimbabwe are not recalibrating towards sustainability, then the future of national economic competitiveness is bleak given countries like South Africa who are our competitors, have formulated a well thought out Green Economic Recovery Strategy.
Ndamba is the chief executive/founder of the Institute for Sustainability Africa, an independent think tank and research institute “advancing sustainability initiatives for Africa”. These weekly New Perspectives articles are co-ordinated by Lovemore Kadenge, an independent consultant and past president of the Zimbabwe Economics Society. – email@example.com or mobile +263 772 382 852.