Accountants call for further cost cuts
ACCOUNTANTS under the ambit of the Chartered Institute of Management Accounting (CIMA) believe that local companies need to inculcate a culture of cost-cutting and savings if they are to successfully weather the present economic challenges and position themselves for future growth.
Since 2009 when the country switched from the Zimbabwe-dollar era to the multi-currency system, most companies have been restructuring their business models and aligning themselves to cost structures that are demanded by hard currencies.
As a result, most companies are now locked in a vicious circle of huge legacy debts, inadequate capitalisation, cash shortages, softening consumer demand, falling revenues, unsustainable cost structures and narrowing profits.
Speaking at the CIMA Africa annual conference in Victoria Falls on September 17, the organisation’s regional director, Mr Badibanga Promesse, who is also a global strategy expert, noted that although there is need for cost-cutting and savings, the country also has to caucus on key financial and economic issues with neighbouring countries’ “financial minds”.
“As an important player in the economy in Zimbabwe, CIMA aims to teach people and business how to save and remove all unnecessary costs in their corporates in order to survive first then succeed.
“Recent CIMA research and work done around topics such as the global management accounting principles, finance business partnering and transparency in the public sector has shown how management accountants partner with business and Government in spearheading critical business agendas.
“They contribute to decision making and performance management bringing not only their accounting and analysis toolkit, their overview of business and their professional objectivity.
“It is these collaborative conversations (saving and cost cutting) that we believe will lead to the insights needed to improve the performance of the Zimbabwean economy,” said Mr Promesse.
He noted that under the current economic circumstances, there is need for companies to revise their business models, rationalise staff costs and review operational costs.
The conference was attended by CIMA members who work in Government, business and civil society.
Last month, the Deputy Minister of Industry and Commerce, Ms Charatidzo Mabuwa, met with CIMA president Mr Andrew Harding to discuss ways in which the accounting profession can help, especially during the current economic environment.
Although most of the local companies underwent staff rationalisation exercises, the continued decline in revenues and profit has led to a second phase of restructuring exercises.
The blood letting has not spared big companies.
Delta Beverages, the largest company on the Zimbabwe Stock Exchange (ZSE) by market capitalisation, reported revenues fell 11 percent to US$538 million in the full year ended March 30, 2016 from US$576 million a year earlier as demand declined.
Econet, the country’s biggest telecommunications company, has been similarly affected, as disruptive technologies such as new social media applications Facebook, Twitter and WhatsApp are chewing into traditional revenue sources such as voice calls and Short Message Service (SMS).