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My Two Cents
Not that there is a dearth of corporate news; at this particular time, politics is much better. The country is currently speculative turf; everyone is now an analyst and everyone claims to know the real reason why certain events are happening.

You will get the odd individual, claiming to know someone from the top and so is better placed than everyone to speak on the matters. Yes, the politics is upon us. Any chance of there being an economic revival will have to wait till December; at least we hope so. So we are left with guesses, probabilities, scenarios, and matrices on how it will play out in the end. In this world certain individuals think many steps ahead, like in a game of chess. As you play the greats in this game, they would have already seen a checkmate in the first two moves. All your counter moves would have been seen a long way off and your reaction will be just fulfilling their conquest.

What’s happening in Zanu PF is best described by this example of an African wife who when she quarrels with her husband will be boasting haumbondirove or tinopedzerana but when the first slap comes she immediately changes to uraya hako or any of the common female cries.

Politics does affect the economy in so many ways than one. All the risk assessment models used the world over have a column on political risk. However the first lesson of politics is to disregard the first lesson of economics. So with that in mind the country and economy are indeed on a standstill, with nothing going on.

There is virtually no production and the little that is being produced (yes capacity utilisation is in the low 30s) is being consumed.

The economy is not generating any surplus value for investment. We are living on imports, consumptive imports hence yes we are in a subsistence economy. The Government sector is no different, 76 percent of the budget is recurrent expenditure, mostly wages for the civil service. Our population is not growing though, that’s a slight contrast to could be happening in other economies.

Therefore fixing the politics is not only crucial but is a matter of principle as it will give a clearer plan to not only Zimbabwe’s citizens but also to its would be investors.

Meanwhile the Zimbabwean market is now correcting itself. As we see companies which employed wrong strategies fall by the wayside, this disease, a cancer within our corporate culture is being cured, it is only sad that such a cure is now coming in the form of complete annihilation of our once famous brands.

In their place we are going to see the rise of new champions, new stars or are we?

What’s clear for now is that business is setting itself for any eventuality. You have three main players; the straight, the opportunist and the fixer. They can never be completely independent of each other their description could be a mixture of two or all of them.

The straight worries about what is right and wrong whether or not he actually implements what he says is another issue. He also stresses the importance of due process and the public interest.

The opportunist doesn’t really need a strategy he stands for everything against the straight and is prone to using a lot of reminder politics, whether or not this actually works is another story.

What’s clear is that he has no viable policy as we traditionally understand it but he is a good tactician as is required him on a day-to-day basis.

The fixer on the other hand seeks radical change whether or not it will lead to cessation of the other region is anyone’s guess.

He among the three is the one most willing to take significant risks to achieve his end.

Majority Shareholders: A Tale of Two Corporates

The following analysis was published in an email based-financial data service on the events at Innscor and Meikles.

With all the management sackings this year, the Meikles AGM had the potential to get messy given the whispering campaign around town over the past few weeks – but nothing really transpired at the end of it. John Moxon rambled on about the TB issue and about how there was so much “agreement” with government and the RBZ and then went on to mumble the company’s performance for the interim period into the microphone. Everyone apart from those who live in La La Land at the top of Meikles know they will never get what they are claiming and will probably get “value” below even that which they deposited. Amusingly, Eddie Cross, warned management not to place “too much hope” on receiving this “bonanza”. Eddie should know.

Later that day, the swaggering new Innscor CEO Toni “Kewl” Fourie was to tell the market about the “Strategic Walk Forward” for the group. Five years back Zed was telling us about how Innscor was looking to have a $1 billion market capitalisation by 2015 (but then again, so too was Shingi!)

Innscor has been one of the better performers in dollarisation, although Mike Fowler and Tom Brown were never really CEO material. John Koumides was, but by his own admission, is now tired. Julian Schonken has always looked like a good candidate for the top spot – he is among a handful of executives today who had numbers at his fingertips, doesn’t read off power points, and speaks economically. But it is not to be (at least for now). At the interim briefing five weeks back, management had hinted that change was imminent … and it was not going to be internal.

Those who read on here will think we are being cruel. Make no mistake, fresh blood is a good thing and the reason we have so much malaise in the boardrooms of our listed companies today can be laid at the doors of Old Mutual and NSSA.

There are too many executives that have been camping in our boardrooms longer than they should have and these two could have done something about it – a long time ago.

Back to Innscor though. Toni rolled out his great vision and quotes to the Innscor management team in the hour before he went on to bore analysts with it again. Whatever Toni may tell us about his credentials for value creation (and his involvement in African Bank and Ellerines needs to be interrogated a whole lot further), he does not seem to know what audience he is addressing. Analysts are not interested in motivational quotes from his heroes and South African mumbo jumbo on how Africa works.

Analysts want to hear how things are going, operationally and financially (400 trucks yes – how much are you going to save?), just like Julian did five weeks ago, a briefing he was present at (Hint Toni: This is how it’s done!) Toni needs to deliver his message in 30 minutes, not in the 80 minutes, which he claimed was 50 minutes.

The first 45 minutes were totally unnecessary.

His points on Africa just looked naive: concepts of volatility, unpredictability, complexity, and ambiguity. What message is the Innscor majority shareholder – and let’s be honest here it’s Zed – sending out by employing a white South African at the helm of the third largest company in Zimbabwe?

What does Zed see in him?
He certainly is as energetic with the walking around the room. Maybe he’s a polished Zed Mini-Me that shaves and does not wear T-shirts and takkies?

Certainly, bring him in as a consultant, but not the CEO – that just sends the wrong message.

His appointment appears to be misjudgement on the part of the majority shareholder.

And here’s the parallel: Meikles’ near terminal decline since 2007 can be entirely traced back to a micro-managing major shareholder that did not listen.

Many advised Moxon against going into bed with Nigel. Back in March 2007, Meikles was $5 a share equivalent and is now below 20c.

Yet there is no schadenfreude in this outcome. No one celebrates it. The Meikles group is a shadow of its once great past, and the decline can be laid at the feet of one man.