By John Kachembere
ZIMBABWEAN companies must adopt new strategies if they are to survive the country’s harsh economic environment, a South African consultancy has said.
LeadStrong, which proffers advice to a broad range of companies within South Africa, said it was clear there was need for a paradigm shift by the country’s companies to survive a fragile economy, which has resulted in massive company closures as the economy deteriorates while the liquidity crunch continues unabated.
“Zimbabwean companies must be prepared to abandon practices that were successful in the past and put in place new strategies that can help them increase revenue streams and improve the bottom line,” LeadStrong director, Alan Bougardt, told The Financial Gazette.
Local companies are currently facing recapitalisation challenges due to clogged external lines and high production costs, resulting in manufacturing capacity utilisation plummeting to less than 50 percent.
A recent study by the World Bank revealed that the country is operating some of the oldest companies in Africa, confirming Zimbabwe’s failure to move with the times due to worsening economic conditions.
According to the World Bank Group Enterprise Surveys (ES), Zimbabwean firms are almost twice as old as those in other Sub-Sahara African and low income countries.
Most local firms are 23 years old compared to 15 years in most African countries and 12 years in low income countries.
Bougardt noted that it was crucial for local companies to stay focused and leverage on what they do best in order to ward off competition.
Zimbabwe’s economy, which has contracted by almost half since the year 2000, is struggling due to government’s failure to take decisive action to stem decline.
The country’s economy is also experiencing a serious dollar crunch and electricity shortages. Several companies have failed to pay salaries or have closed altogether, in a country where only 500 000 out of a total 13 million people have formal jobs.
Schalk Viljoen, a director with LeadStrong, also said in light of Zimbabwe’s transitional politics, it was necessary for local firms to position themselves and be prepared for potential changes in the economy.
“In times of crises it is important for businesses to stand together and speak with one voice,” he said.
“Business people must also strengthen and apply family values such as mutual love and respect for one another in their companies,” Viljoen added.
Research has shown that strong family values can prove extremely productive in business.