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Showing posts from January, 2016

An ineffectual central bank: One of the many unintended results of Zimbabwe`s dollarisation

Coming out of the worst economic and financial crisis that had threatened to destroy the world's financial capital, policy makers in London had to employ an unorthodox set of measures to keep their economy and financial markets afloat.  The year was 2009, with Sir Mervyn King at the helm of the Bank of England, the UK`s central bank adopted an aggressive stance toward the economy.  The UK`s Monetary Policy Commission decided to slash the country's base rate (the interest rate at which selected specified UK banks can borrow funds from the Bank of England) to a record low of 0,5 % and print money to inject into the economy, using £75 bln worth of quantitative easing  (an unconventional type of monetary policy in which a central bank purchases government securities or other securities from the market in order to lower interest rates and increase the money supply,) in order  to jump-start its ailing economy.  Across the Atlantic, the situation was no different. Wall Street, the sym…

Multiple board seats in Zimbabwe: Just how many board seats are too many?

Several names feature prominently on the board of directors of Zimbabwe Stock Exchange (ZSE) listed companies. Famous names like Anthony Mandiwanza, Leonard Tsumba, Canaan Dube, Muchadeyi Masunda just to mention a few, sit on the boards of more than one company. The obvious question that arises is whether these individuals, who hold several board seats, have the time to adequately oversee executive management, especially during periods of economic difficulties such as the one Zimbabwe is currently in. Global trends have seen companies balk at taking on board potential directors who hold more than one seat. The logic behind this thinking is that, companies would want to ensure that they only secure the services of directors who will be hands-on and able to devote the adequate time and skills to lead the corporation.
Corporate boards are mandated with charting a company`s strategic vision and devising a winning game-plan to ensure that executive management consistently deliver shareholde…

[Updated] Deflation, Low growth and subdued capital flows: Zimbabwe`s toxic cocktail for 2016

Zimbabwe`s current structural constraints, will likely curtail economic growth, and private sector investment in 2016. The country`s growth outlook for this year remains negative, barring a miraculous intervention in policy shifts to spur economic activity. Without the prioritization of economic growth ahead of the political agenda, this pessimistic view of Zimbabwe`s economy could even get worse and spill over into 2017. The Ministry of Finance and the World Bank have both come up with overly optimistic growth forecasts for this year at 2.7% and 2.8% respectively. But as we have come to expect, these forecasts will be trimmed down as the year progresses. Here are some of the salient factors to look out for in the coming year.

Inflation Outlook
Zimbabwe`s inflation outlook is likely going to remain negative for much of the year – deflationary conditions. The South African Rand`s weakening, political uncertainty in the country, a growing fiscal deficit and sluggish economic growth headin…

Kwese TV, a potential game changer or simple waste of money for Econet?

Econet is a bit of an enigma. While it has relatively solid fundamentals, it is considerably cheap when compared to some of its regional telecoms peers. Whether this is down to the Zimbabwe risk factor causing investor aversion, or  investors not just warming up to Econet`s governance and disclosure practices as some hypotheses go, Econet`s price has been rather depressed.
Now, as revenue is increasingly being put under pressure, Econet Wireless has been looking for new ways to shore up revenue, something the suits at Msasa Office HQ, like to call future-proofing the business. Essentially, these are ways of ensuring the business will continue generating money in the future. This has led to product offerings such as Econet`s vehicle tracking service, Connected Car, although chatter doing the rounds is that, this offering has not quite worked out to plan. For all the successful innovations Econet has brought out, there have been others that have failed woefully, and publicly.

Still, Striv…

“The economy”, a convenient excuse for unimaginative Zimbabwean company executives

Glance through the chairperson`s report accompanying the financial results of most listed companies, and it has become commonplace for blame to be partitioned on low aggregate demand and suppressed economic challenges prevailing in the country for the less than satisfactory company results. Justifiably so one might say, after all, the macro-economic challenges prevailing in the country have significantly weighed down on the earnings capabilities of companies.
But could this line that seems to now be used with near-reckless abandon, be simply an excuse of convenience for c-suite company executives?  Consider this, companies rise or fall largely due to the nature of their leadership. While, the external economic environment plays a part in affecting the fortunes of a company, without solid leadership steering a company in the right direction, it is very much possible for a company to be run to the ground even in a flourishing economy. Local company executives earn, for lack of a better w…

Comrades, you`ve got it all wrong on indigenization

If the Zimbabwean government earned a buck every time the word indigenization was mentioned, the government probably wouldn’t be struggling to pay civil service salaries. That is just how prominent the issue of indigenizing the economy has grown in Zimbabwe over the years. From the time of minister Saviour Kasukuwere vociferously pushing for the nationalization of banks and mines, to the somewhat toned down era of Francis Nhema, it appears we are headed for exciting times, with new indigenization minister Patrick Zhuwawo. His recent showdown with finance minister, Patrick Chinamasa over the implementation of the policy shows how crucial this policy is in the broader national context, but  even more, how incoherent the government`s stance on this issue is.
A logical look at the issue reveals truths that may be unpalatable to some. I put it to you that, indigenization and empowerment is not taking what someone else has worked hard to build in the past and simply giving it to someone else…