Zimpapers Logo

Nigel Chanakira

Business Reporters
While Government did everything it could to create a conducive economic environment for indigenous entrepreneurs to thrive, many have fallen by the wayside after failing to navigate the high waves of economic turbulence.
Like a malignant cancer on the bone, fate has also claimed the scalps of innumerable companies that were headed by Zimbabweans raising questions about what is wrong with the leadership qualities of independent indigenous executives.

Zimbabwe adopted the US and other monetary currencies to reverse total economic meltdown. All seemed well, businesses had misread the economy, inflation and other ills of a chaotic economic system were in the rear-view mirror, so it seems, but a new challenge was brewing in the not so distant horizon. Maybe money grew on trees.

The owners, chief executives and financial directors forgot the first lesson in business. Rather than running their financial models and analysing debt and equity, the whole lot quickly leveraged non-cash generating businesses 100 percent in debt, and none thought of equity placements. However, the economy had called their bluff and suddenly showed its true colours.

The high profile entrepreneurs and executives that failed to stand the heat included Kingdom Financial Holdings’ Nigel Chanakira, Interfin Banking Corporation’s Farai Rwodzi, Renaissance Merchant Bank’s Patterson Timba, Barbican Bank’s Mthuli Ncube and First National Bank’s Nicholas Ruturi.

Most intriguing about these founding directors is the fact that most of them were invested in the financial services sector and at one point or the other had significant spells with owner-managed arrangement in running the companies.

Collapse of indigenous founded companies is not the only feature characteristic of the post-dollarisation era that saw several indigenous companies, mostly banks, going under after they failed to adapt to the new economic dispensation.

But the trend stretches way back into history, raising concern about the unsustainability of owner-managed companies and the importance of strong corporate governance structures.

Other indigenous entities that became casualties of  owner management include Time Bank, founded by Chris Tande, ENG Capital started by Gilbert Muponda and Nyasha Watyoka, Intermarket Holdings by Nicholas Vingirayi and Lifestyle Holdings by Tawanda Nyambirai as well as Royal Bank’s Jeffrey Muzwimbi.

Save for TN Financial Holdings, most of the failures of these financial services companies involved allegations of abuse of power and resources, which also exhibited strong signs of serious corporate governance deficiencies.

Former RioZim managing director Josh Sachikonye left the company on the brink of collapse as did                  starafricacorporation under former chief executive Pattison Sithole.

The script was not different for Edwin Chimanye’s David Whitehead Textiles and TransZambezi Internationals’ Edwin Moyo, Cecil Muderede’s Jaggers Wholesalers.

Harare businessman Zac Wazara’s Medical Air Rescue Services is under judicial management while its sister company Valley Technologies is dead and buried.

Similar misfortunes befell indigenous firms such as Cairns Holdings Limited, which was once headed by the late Philip Chigumira, Fred Mtandah’s CAPS Holdings and Oliver Chidawu’s Pelhams Limited.

It should, however, be noted that the transition to dollarisation resulted in most indigenous owned and managed companies failing to adapt to the new rigorous environment characterised by tight liquidity, high cost of labour, funding, utilities, power and stiff competition from lower priced imported products.

But it has not been the same situation for companies with strong external links for effective corporate governance and financial resources support and these include Delta Corporation, Schweppes Zimbabwe, Nestle, PPC Zimbabwe, National Foods, Zimplats, Mimosa Mining Company, to name but a few.

The jury is still out on whether these firms succumbed to the sanctions poisoned environment or the managerial weaknesses of the owner managers.

Alternatively the reason could be the sector they ventured into – the financial services sector – was not ready for many players.