Open up and embrace competition

IRECENTLY had interesting discussions with family members and colleagues regarding the unending reports on cement shortages being experienced in Zimbabwe, and the causes thereof. Of course, references were inaccurately made in some quarters that the so-called political illegitimacy was somehow causing the shortages.

Fortunately, however, Zimbabwe’s major cement manufacturers publicly put to rest the pessimists by issuing a statement, which read as follows:

“The (cement) consumption spike being witnessed is a very positive economic growth indicator, which may be attributed to a rise in mortgage finance, as well as improved disposable income following a successful tobacco and maize farming season on the back of the Command Agriculture programme.”

In summary, the cement companies stated that the recent spike in demand for cement, which resulted in a supply backlog on the market, is a positive signal of economic growth.

There are two interesting observations that I made during this “cement shortage” saga.

The first was that in Zimbabwe, we have what I call the sub-group of perpetual skeptics.

Arguably, the sub-group of skeptics consists of those ordinary citizens, politicians and even business leaders that choose to whine and whimper about socio-economic conditions without professing practical solutions to the problems thereof.

It is this sub-group of skeptics that I will be speaking to when I make my point later in this article.

The second observation that I made was simply this: if the demand of cement exceeds supply (in a country where we are constantly reminded by doomsayers and skeptics that unemployment is above 80 percent), then my question is: who is buying cement? Who is building houses? Let me tell you who. It is the farmers, the miners, the kombi drivers, the money-changers, the commodity-brokers, the cross-border traders, or, in summary, the members of that community that we commonly refer to as the informal sector.

Let’s remember that in 2017 some of Zimbabwe’s cement-producing firms recorded up to 40 percent increases in profit.

To the discerning eye, it becomes clear that there is a vibrant consumer base in Zimbabwe, where people operating in both the formal and informal economies are earning enough to consider building houses.

It’s also clear that the moment a person plans to build a house, he or she would know that furniture is also needed alongside, food, electricity supply and water - all of which are funded by money.

In this context, it again becomes clear that there is money circulating in our informal sector.

Simply put, people who are building will also need places where they can purchase goods and services, like supermarkets schools and transport, and the supply of those goods and services essentially means employment creation and consequently more tax revenue for the State.

This all points to potential economic growth as indicated by the cement producer’s statement that I highlighted earlier.

Nevertheless, why should all this concern you, the reader, as a citizen, potential investor or a business owner?

The answer is simple: where there is going to be economic growth, as is the case with Zimbabwe today, there is also going to be an increase in competition.

While the prospective arrival of foreign businesses, investors and capital is good news for our job-seeking citizens, the same prospect should alert local business owners to adequately prepare for competition.

Studies in countries like South Africa, Botswana and Mozambique have demonstrated that when the economic environment is ripe to attract foreign businesses, we find that those firms come in equipped with adequate capital, as well as precise market intelligence and this often results in those foreign firms excelling in our markets and ultimately taking business from locals.

In summary, for any business owner, it’s important to plan and strategise on how to remain competitive, especially since we anticipate that more and more foreign businesses will be entering the Zimbabwean market very soon.

Here are some of the strategies that local businesses can implement in order to remain competitive:

Businesses should adopt global l best practices and technology (particularly internet). This is particularly necessary in the tourism and hospitality sector where our foreign visitors should be charmed by our Zimbabwean hospitality.

Citizens and businesses alike should cultivate the “Buy Zimbabwe” culture. For citizens, this means supporting local products, and for businesses, this means producing products that are not only locally affordable but also globally competitive.

Local businesses should invest in substantive market intelligence. This involves investing in the various forms of market research which benefit business efficiency, explore brand reach and quality and even determine levels of customer satisfaction.

Judging from neighboring countries like South Africa, foreign businesses more often than not rigorously implement at least two of the three aforementioned strategies and as a result, they excel more than local businesses.

As Zimbabwe, we should therefore avoid what is currently the South African situation where politicians and non-competitive local businesses blame their non-competitiveness exclusively on white monopoly capital.

Just look at the ongoing war between Uber and the South African taxi associations as an example. Let us not be like that. Instead, let’s embrace the “Zimbabwe is Open for business Policy”.

Let’s also buy local. But more than anything, let’s do adequate market research.

If our local businesses follow that approach, they will undoubtedly see positive results in the near future.