Friday, August 10, 2018

Industry Revival Requires More Innovation, Not Money
By Southern Times
Aug10,2018
Prosper Ndlovu

DISTRESSED companies in Zimbabwe do not necessarily need money but to revisit their business models as some of them have been overtaken by events.

Prominent Bulawayo-based businessman and Zimbabwe National Chamber of Commerce (ZNCC) past president, Obert Sibanda, said this as he challenged businesses to move with the times by embracing technology so as to meet modern market tastes.

Zimbabwe’s manufacturing hub, Bulawayo, has suffered severe de-industrialisation in recent years largely attributed to closure and relocation of companies as a result of a myriad of political-economic factors and structural changes in the macro-economic environment. While many tend to blame politics and lack of funding for the demise of industry in the city and the country at large, Sibanda says not all industry problems require money.

“For any company in distress, the most obvious prognosis is money. I, however, want to point out that money is not the panacea to most companies’ problems. Most companies need to revisit their business models as some have been overtaken by events. The biggest challenge in most companies is not money but is the market,” says Sibanda, a construction industry player and entreprenuer in the education sector.

He made reference to a book by Moeletsi Mbeki titled "Advocate for Change” in which the author refers to the Lagos Plan of Action, which was premised on a number of article observations about Africa`s industrialisation experience.

The first observation was the inadequacy of domestic markets as a basis for far reaching industrialisation under import substitution. The second observation was technological dependency, followed by the financing of imported producer goods and fourth being the weakness of the domestic industrial class both in terms of financial and managerial capacity.

“These observations that were highlighted in 1971 in the Lagos Plan of Action are still applicable to our situation today,” says Sibanda. “When a company is in distress, it is important to establish whether the company is economically distressed or financially distressed. An economic distress refers to a company`s inability to generate business, a company whose market has been affected.”

On one hand, Sibanda says financial distress talks of a company failing to meet its financial obligations, a situation in which it could be in a position to generate good business but is not well capitalised. For those companies that are economically distressed, they should be encouraged to be innovative and come up with new business models, failure to which they should be allowed to die. If a company can demonstrate that it is financially distressed there should be a deliberate effort to assist them," says Sibanda.

“Government should come up with a task force comprising of team from both private sector and public sector whose mandate is to research and recommend companies that can be resuscitated and assisted to capitalise,” he adds.

This includes identification of key sectors that have potential for growth. For instance, Sibanda believes Bulawayo in particular, and the country at large, can leverage on the agri-business value chain, which has huge potential given its comparative advantage in terms of domestic sourcing of raw materials. He dismissed as a myth that Matabeleland provinces are only good in cattle production as opposed to cropping.

“It is always argued that in this region there is poor soil and poor rains. There is nothing like poor soils but poor farmers. What this region needs is to build dams and irrigation schemes. Once there is water, the soil will be tested and the right fertilizer is applied. Those who want to entertain the issue of poor soil, how about Israel a desert being a net exporter of food?”

There have also been calls for Bulawayo in particular to take advantage of her wider comparative advantage in areas such as mining and mining value chain, services, tourism and infrastructure. To Sibanda, the existing infrastructure in the city is an enabler and as all the sectors need good roads, good rail network, communications, and water and sewer reticulation.

In order to revive Bulawayo industries and other key sectors across the country, all stakeholders need to work together to identify the problems that created this situation, says Sibanda, adding: “The issue of dealing with symptoms cannot help the city to turn around”.

No comments: