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fiscal policy to set the tone
By now most of you will have read, seen or heard Finance Minister Tendai Biti’s budget review statement presented in Parliament yesterday. Unfortunately by the time of writing this article it was still to be presented but we knew it was not going to be easy for the Finance Minister given the challenges at hand.
Crafting policies of that nature is never a stroll in the park, suffice to say the economy has been waiting with bated breath for a fiscal policy that will set the tone for the rest of the year.
What is critical now is for stakeholders to form strategies, based on the budget as regards efforts to propel the economy.
When opening the Third Session of the Seventh Parliament in Harare on Tuesday President Mugabe said Government had revised economic growth projects from 5,4 percent to 7 percent, stressing the critical importance for all stakeholders to give of their best.
The President painted a positive picture for the economy, announcing a number of policies and projects to fire economic growth while also laying several economic Bills that should allow for a more efficient way of doing business. The economy is saddled with many challenges but such efforts to get things right as enunciated by President Mugabe should give impetus to the turnaround strategies.
Minister Biti’s package should also see the economy take a more pronounced dimension for the rest of the year. Traditionally, after budget presentation, the central bank governor will do his bit to maintain the complementarity that should exist between fiscal and monetary policies. We will keep our ears on the ground for this one.
The central bank presently cannot control money supply — an instrument often used to tame inflation, and is also not playing its lender-of-last-resort role to banks, however, it remains strategic in the economy in terms of supervising financial institutions, controlling interest rates, and its advisory role to Government among other functions.
KMAL saga deepens
Meikles Limited was this week breathing fire and brimstone, threatening to reshuffle the Kingdom Financial Holdings board. In a document to the Reserve Bank of Zimbabwe Governor Dr Gideon Gono which was also copied to Minister Biti, Meikles argued its case, charging Kingdom for bad behaviour and failure to adhere to set deadlines and other corporate "formalities". This has only added fuel to the fire that has been raging for too long.
Last week’s instalment on this wrangle elicited so much feedback from readers.
Below are some of the e-mails that I received:
Dear Victoria
I liked the article about KMAL, it’s unfortunate the marriage did not work but remember sometime back I said this merger did not make really much sense, but anywhere it’s water under the bridge.
1. There was really no apparent synergy in the merger, it was more like Kingdom wanted financial backing for the central bank capital requirement more than anything else.
2. There is now a silent part to the merger, Cotton Printers, I presume when the valuation of shares for swap with Kingdom shares was done Cotton Printers was used as part of the Meikles group, now its under liquidation, where the Kingdom shareholders sold a dummy or its just one of the unfortunate incidences of the past trading regime.
3. Meikles somehow we can credit them with foresight, they had foreseen 51 percent coming and in my opinion they wanted to have a black partner on board who they could control, they wanted to avoid an Indian type of marriage where when indigenisation comes they didn’t want to be dumped with a suitor who they may not have been able to control. They thought Nigel was black but more whiter.
4. The share price for KMAL performance was somehow funny, where synergy is supposed to be 1+1=3 the share price was 1+1=0.75, meaning both shareholders of the two entities lost out on value, they were just fortunate it was the time of hyperinflation, if it was now a lot would have been out of pocket.
5. There is also a corporate governance issue that may have caused a fallout, normally shareholders entrust management to run the business, something which brings in agency problem, but in this case was it prudent to have one major shareholder as chairman and the second major as CEO.
Whilst on the surface it might appear good because one assumes their goals to be congruent in all the decisions they make, but it’s another ball game altogether when the two represent different constituents with different goals.
6. There is the ordinary pensioner represented by Old Mutual and other pension funds I presume. What’s happening to the value of their investment?
7. Or plain simple was it a clash of egos, as we are now witnessing in the demerger?
I guess it’s more than what meets the eye and goes through the ears. Both parties standing apart are true forces to reckon with.
Masimba Shumba
Another wrote:
Hi there
I think Moxon is the loser because he does not want to let go. What is he afraid of?
If the 22,5 million was paid then thus the starting point for the demerger and the demerger should go ahead as planned or as agreed.
Abel
Tachin who is currently doing a masters in BEE at a university in South Africa had this to say:
Hi Ruzvidzo
I always read your articles with great interest and the KMAL article was spot on. My comment is centred almost entirely on the term "maturity". I have to argue my point here, experience being a function of environment rather than time I strongly feel that as you put it; "dynamism and innovation" require leadership.
Our crop of black business people (Nigel being the obvious example) lacks some maturity when it comes to leadership and emotional intelligence also comes to play. One has to take cognisance of the cultured manner in which Moxon has simply and unequivocably stated his position with regards to all that has happened.
Corporate governance counts for nothing when shareholders and CEO in particular act in emotionally unintelligent ways.
Is it possible to round up all the articles on KMAL since the fall out when Nigel went to the police etc? You can then derive a ludicrous descent into mediocrity by a man you ascribe as innovative and dynamic. I am sure with your library you can get these articles and that after reading them you will find that it is the same old selfishness and myopic business tendencies that brought down our brother man.
The real reason Nigel lost the plot was blatant greed and impatience.
Oil and water do not mix; and this split had to happen at some point ie a business that has been built over a century as a result of deliberate attempts to grow a brand and an empire and a man who made his money off a paralysed economy through even para-market dealings etc as all banks did in the period 2000-2003.
A business is not built on media hype and individual charisma (Nigel has tonnes of this); it takes a lot of humility to lead and the media display by Nigel shows a failure to understand this principle.
It’s not a concept at all, and these issues really have nothing to tell on mergers or demergers. I believe it has exposed that our black understanding of boardroom politics is still myopic. I just wonder what Strive Masiyiwa (Econet growth) or Patterson Timba (FML takeover) would have done . . . the level of maturity they show certainly points in the other direction.
Nigel needs to nurture his talents to evolve into a business leader and not concentrate on trying to drive market sentiment through semantics . . . after all the market really thinks for itself and share prices will always reveal to us what true investors think. Suffice to say it will be the same level of cultured, principled, generational wealth creating focus that will leave Moxon the better man.
Said another: I have been following the KMAL saga with great interest and the developments are bitter-sweet. When the deal was broken, I rated as it one of the milestone mergers in the country since it bought together two alien sectors (banking and retail), it was a case of unlike poles attracting and we all hoped for everlasting marital bliss.
But,I think my namesake Nigel, lost it , I mean it is clear that he got the bigger cake from the whole transaction thereof and although there is no race card, I think Nigel is trying to take advantage of the indigenisation policies and ‘fleece’ Moxon.
Nigel can safely be called a "traitor" when he rushed to RBZ and blew the whistle that Moxon was "externalising forex". Isn’t it at the time Nigel "blew the whistle", the two were working together that means Nigel himself is also culpable. In this marriage Nigel was always the "unfaithful" partner as it were.
Well, on an intresting note. Themba Mliswa is alleged to have defrauded US$24 million, that means he could have easily come to Nigel, finance the demerger which needed US$22,5 million if I m not mistaken!
But I like the way your paper has been objectively reporting on the KMAL saga.
Nigel Pfunde
In God I Trust.
victoria.ruzvidzo@zimpapers.co.zw
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