Several years ago. The year 2009 to be precise. Zimbabwe abandoned its local currency the Zimbabwe dollar and dollarised the economy. The United States Dollar, alongside the South African Rand became the two major currencies of use.
The move was a masterstroke. Inflation which had raced to 230 million percent at the last official count in 2008, was immediately tamed.
In the years that followed, the economy experienced phenomenal growth, albeit from a low base.
Of course, dollarisation was not without its challenges. One such challenge is that authorities were left standing on one leg in terms of formulating economic policies.
While Treasury, through the national budget could formulate fiscal policies, it lacked support from the central bank, which could no longer formulate monetary policies. In particular, the central bank could no longer issue physical cash or control money supply levels.
Without a monetary policy, it meant the United States dollars that the country earned were not backed by physical cash. Since the central bank could not print US dollar notes, they had to be imported. However, as much as notes were imported there remained another challenge. That of change. Consumers were forced to round off their purchases, akin to forced spending.
But amid such challenges, an innovative solution was born. Towards the end of September 2011, Econet introduced a mobile phone-based money transfer platform, Ecocash. With the platform, consumers could pay for their products to the very last cent. No change issues.
The mobile money transfer platform did not only provide a solution to the change issue. It revolutionised the whole payment system in the country. The country’s financial inclusion numbers experienced exponential growth.
The interesting part is that the mobile money platform was born out of challenges.
Because of the cash and change problems a new service was birthed.
The mobile money transfer service did not exist prior to September 2011. No one knew something like that could be done. Econet looked beyond what was in the market at that time and introduced a product that created a new industry in and of itself. Econet created a product that the market did not know of, or ask for, but embraced once it was introduced.
Mobile money was a blue ocean strategy and we can all acknowledge how transformational it has been to the way we transact in this country. Unexplored and untainted by competition, ‘blue oceans’ are vast, deep and powerful in terms of opportunity and growth, as we saw with Ecocash.
Today the Zimbabwe economy, like any other country across the globe, is faced with a challenge that could cripple the economy. If businesses and economic players do not wear their thinking hats, some entities might close shop for good.
The spike in Covid-19 cases has meant the country has had to impose restrictive measures affecting both households and businesses.
Non-essential businesses, including registered small to medium enterprises, have had to shut down.
Some essential businesses are now closing at 3 pm and even if they were to be allowed to open for longer hours, consumers are restricted in terms of their movement. There is also a curfew that runs between 6 am and 6 pm.
All these restrictions imply lost revenues and reduced profits. The only aspect of a business that’s increasing is probably costs. Corporates have had to increase spending to guard against the spread of Covid-19.
Faced with such challenges, and Covid-19 likely to be with us for much longer, it is time for the corporate world to look at their business models once again. Do they remain calm in their old models or its time to reinvent them? Is it not time for firms to create new demand. To develop uncontested market space rather than wait for a return to the old way of doing things, which can no longer be guaranteed.
Unlike in other countries where online businesses have been the most thriving, even before the coronavirus pandemic, not many businesses in the country have changed their business models to meet up with their customers online.
A few, including Zimbabwe Stock Exchange-listed entity RTG have looked online for business. Through its Gateway Stream, RTG, which we mainly know as a Hotel Group, offers a “unique online shopping experience” with 9 applications in one. Through the Gateway App, RTG can also organise online musical concerts that people can pay for.
While, traditional retailers, are having to contend with reduced or no sales, those who are innovative are not affected as much. They are now selling online. The restrictions brought about by Covid-19 calls for a relook at how to do business and is certainly not a time to mourn.
Businesses can choose to mourn or take this as an opportunity to address, through disruptive innovation, the needs of large groups of potential customers who might end up being shut out of the market if the coronavirus pandemic remains with us for longer.
Although private sector actors are expected to play a key role in keeping their businesses afloat and meeting the needs of consumers, government actions can also influence the transformation process both directly (through incentives) and indirectly (through financial and tax regulations). Government policies have a significant cumulative effect on the success of firms in the marketplace. They help create the environment in which firms attempt to commercialize new business models and technologies.