WHEN Joe Mutizwa was appointed starafricacorporation (Star Africa) chairperson in 2012, a huge announcement was made.
It did not cross his mind at the time that this would be a bumpy ride.
He had to deal with disgruntled creditors who were owed a staggering US$76 million by the firm that had plunged into a crisis induced by a decade-long turbulence which ended with 500 billion percent inflation in 2008.
By its own count, the Ministry of Finance said 4 500 firms closed between 2011 and 2013 — just as Mutizwa was taking the hot seat at one of Zimbabwe’s biggest but troubled companies at the time.
He had to ward off a push by disgruntled creditors to liquidate the Zimbabwe Stock Exchange-listed firm, whose executives had gone off rail by biting more than they could chew.
But following a dramatic bounce back by the firm during the year ended March 31, 2021, the veteran executive told businessdigest that he often regretted taking on the challenge.
If the hands of time could be turned, he would possibly take a different path than agreeing to take another plunge, Mutizwa told businessdigest on Wednesday.
Star Africa lifted inflation adjusted revenue by 23% to ZW$5 billion (about US$58,4 million) during the period, a marked rise from ZW$4,1 billion (about US$47,9 million) during the comparable period in 2020.
But a downward adjustment in the fair value on investment properties and a ZW$163 million (US$1,9 million at this week’s official rate) monetary loss triggered by the depreciation of the value of the group’s monetary assets saw its post-tax profit decline to ZW$109 million (about US$1,2 million) during the review period, from ZW$185,9 million (about US$2,1 million) during the comparable period in 2020.
While Covid-19 induced write-downs held back profits growth, Friday’s financial announcement demonstrated Star Africa’s resolve to clear growth inhibiting debts that saw the company being placed under a secondary scheme arrangement with a focus to clean up its balance sheet.
Almost all debts under the scheme have been cleared.
“I did not fully appreciate the depth of the problems that the company faced when I went in,” Mutizwa, who announced his retirement as the board chairperson last week, said.
“I think I would think twice,” he said, after being asked if he would take up the challenge under the same circumstances.
“Looking from outside one always goes in with a bit of a wrong picture thinking that it could be a small problem, I will tackle it and sort it out. But if I was invited back into that situation knowing what I know now, I think I would think harder before I take it,” added Mutizwa, a former chief executive officer at the beverages production blue chip, Delta Corporation.
As Mutizwa entered the fray in 2012, the board had scrambled for a protection order under a scheme of arrangement.
It became the cornerstone of the recovery reported last week.
He immediately deployed many years of experience at the helm of Delta to begin the difficult journey to rebuild one of Zimbabwe’s most important firms, by virtue of its sugar producing business.
Mutizwa said he had full backing from Star Africa’s major shareholder, National Social Security Authority (Nssa), the only top dog with a strong war chest at the time.
An operation to refurbish the firm’s aging plants was underway in no time.
But a whirlwind of doubts and regret ran through the big executive’s mind as work progressed, he disclosed to businessdigest this week.
His extraordinary track record was also on the line.
Giving an account of when he decided to take on the challenge, Mutizwa said: “I was a little bit apprehensive. You know I always like challenges. For some reason, it is part of my nature to go where there are very big challenges, so that is part of what excited me to tackle a problem that looked like you could not solve it.
“One part of me was very apprehensive as well. I left Delta with a very high reputation, a very good reputation and I was saying am I not going to damage my reputation by going into this? You remember Warren Buffet said when a good manager goes to a bad business usually the reputation of the good manager suffers. I was always thinking about that Warren Buffet quotation,” Mutizwa added.
Without doubt, Mutizwa was up to the task.
Nine years to the day he plunged into the vortex of the troubled firm, he leaves the Star Africa board a happy man, especially after handing over the top chair to longest serving non-executive director Rungamo Mbire, who is also an ex-director at Delta.
Mutizwa said Mbire was up to the task.
The US$76 million mountain of debt is now history, he said, and the firm is back to profitability.
In his own words, the balance sheet of the company was weak, and Star Africa had dabbled into many businesses.
This is why he led a streamlining exercise.
His toughest hurdle along the way was having to see a wholesale staff rationalisation across the company’s 10 or more units.
Some of the businesses had to be hived off, save for only four, including Country Choice Foods and the firm’s property arm, Silver Star.
The firm also maintained its 33% shareholding in Tongaat Hulett Botswana.
Mutizwa said clearing the debt at a time when the country had foreign currency shortages was just a major turning point for the business.
They had to convince creditors to take haircuts on accumulated debt (both principal and interests) of more than 60% in some cases.
The local debt was easier after the Zimbabwe Asset Management Corporation, a vehicle created by the central bank to take over debt owed to banks in exchange for 57% share-holding in the company, came through.
After his adventure at Star Africa, Mutizwa who sits on various boards of listed companies, remains focused on a leadership training initiative which he started a while back.
His vision is to create a cadre of competent young managers and executives in the country and abroad, he told businessdigest. Read full interview on page 12.