Local businesses can be created

16 Apr, 2021 - 00:04 0 Views
Local businesses can be created

eBusiness Weekly

Indigenisation as a policy received a bad reputation and the way it was set out was a major brake on much needed investment, since it was largely seen as a policy of taking from those who had invested or had built businesses.

It was also encouraging the paper-shufflers, people ready to be the “front person” grabbing dividends without investing simply to lend their name and ID card, with an indigenous suffix on the number, to someone who did not want to sell out. And that was hardly the way to create a growing economy, simply shuffling ownership of the old without creating anything new.

But this does not mean that the goal of having Zimbabweans owning and building businesses must be abandoned as well. We are not dealing with a finite pool of business that needs to be shared out, and that appears to have been the original belief in practice if not in theory. We are dealing with a growing economy, in fact a rapidly growing economy under present development policies, and that means we can operate in a quite different way.

So we can be investment friendly, very friendly, encouraging major inward investment and guaranteeing this investment will be protected, and still see a growing percentage of our growing business world being owned by Zimbabweans simply by making sure that the economy is growing and that Zimbabweans are equipped with the skills and services that they need to enter that growing business environment.

We do not have to look at a situation of rationing or think in a dualistic “either-or” way. We can have both and we need both. And we definitely do not have to think that foreign investors have the big stuff and local people have the small stuff. 

Every business started with nothing but a dream and an idea. If the ideas were good, and the owners put in the effort and had the required skills, it grew. We have seen this if you glance at the top companies on the Zimbabwe Stock Exchange. 

Econet Wireless and Cassia started off with a hard-driven bright young man who had just resigned from his parastatal job sitting in a two-roomed office suite in the Kopje area.

Innscor, and the companies spun off from Innscor, started with two hard-driven bright young men just out of university opening a takeaway. And according to the lists put out by Forbes those three young men are now the three richest people with Zimbabwean ID cards. They built their empires rather than inheriting them, and they built them before they were old.

They overtook others on their climb, of course, but that is business. 

So it is quite possible to create huge business empires with the dominant shareholders being citizens. As we have pointed out before, all three of those now wealthy men from the very beginning believed in converting cashflows and profit into investment, rather than into fancy lifestyles, mansions and fast cars and all three were more than prepared to cut other Zimbabweans into their growing empires by floating their firms on the Zimbabwe Stock Exchange once they had reached secured viability to raise more funds for expansion. 

But at the lower level there are thousands of smaller businesses, many family owned, that provide a good living for their owners and employ a large number of people in total and pay a good chunk of the taxes that the Government needs to provide the services we all desire. Some may grow into empires, but many will simply prosper, producing what we need to produce in relative anonymity, only known to their customers and suppliers.

And we are not just talking about commerce. A stroll around any industrial area will see, among the older established firms that have become household names, hundreds of newer businesses, some very new, run by hard-driven young and middle-aged Zimbabweans with a dream and a determination to realise that dream.

The Government has already put in measures to accelerate this business growth. For a start there has been a switch in emphasis in the education system, with technical education and entrepreneurship now stressed. That will ensure that school leavers and graduates have the required skills and the required attitudes. Both are needed.

Then there is the growing investment finance available for newcomers, the SME, women’s and youth programmes. These are not handouts for the favoured, but rather bank managers looking at business plans, assessing the applicants’ skills and attitudes, ensuring that the homework was done first. There will be some duds, but generally a lot of people will get the start they need.

We no longer have to worry, if people were still worried, about the ethnicity of people moving into business.

Zimstats, in its census reports, has noted that ethnic minorities are so tiny that the census takers have to use a fair number of decimal places in the percentages to even record them.

So demographics ensure that well over 99 percent of new local businesses will be “indigenous” in its old sense, although that term now incorporates all citizens. We no longer have to even lose even a minute’s sleep over the danger of a hereditary caste controlling the economy.

Even some of the foreign investment has a local component, at the moment coming from the Government which has partnered some major investors in mining to accelerate progress. Here there is an opportunity for the Government to start thinking of revolving funds.

The Industrial Development Corporation, when it was set up, was not intended to be a vehicle for State-ownership. It was supposed to be more of a venture capital concern, helping to establish new major industries and then selling out, probably by floating the shares on the stock exchange and then using that money to invest in new ventures. Its direction changed at UDI when it took over those who were disinvesting, but it could get back on course easily. 

Already the Government is building up lists of state-owned enterprises that are ripe for sale and which no one can imagine are “strategic” in any sense except as taxpayers.

That process can be accelerated. It is not just a case of having private business owners calling the shots, which tend to be more efficient, it is also freeing up investment capital for other major Government schemes, like the new housing programmes and infrastructural development, where State involvement is required.

With inflation now being tamed the pension funds and the insurance industry need decent investments so more equities would be a sound move.

In fact the latest report on the insurance sector raises concerns that those in the funeral insurance sector, in this latest example, are grossly over-invested in property, contributing to what some fear could be a potential bubble and in any case is hardly liquid. 

So there is local money that could be placed in equity and money markets.

Obviously insurers and pension funds need a spread of investments in these sectors, so a dud does not wreck them, but we need creative ways of attracting some of that money into sectors other than commercial property.

And property investments tend to have a decent percentage of residential property in fancy suburbs, a sub-sector where surely those who can afford to live there can afford to buy and build. 

In one area, agriculture, the Government has been making a major effort to create a vast number of new indigenous business people, by converting small-scale farmers into commercially-orientated farmers who will use their farms to make money.

And this effort has now been put on a business footing, with input schemes seen as investments rather than handouts and with already, at the Command Agriculture level and in the tobacco industry, growing private sector involvement and private money. 

Converting more than 1 million families into money making businesses will also create vast opportunities for new industries and new service companies who can process the produce that the farmers sell and make and supply the goods and services they want or need to spend their new income on.

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