Starting this month, the Business Focus column will be hosting interviews once a month as we seek to facilitate thought-provoking debate on all aspects of the economy.
Zimbabwe is replete with minds that can energise the economy and take it to higher levels and we intend to harness these.
The sharing of ideas and experiences can be one way of bringing the renewal and transformation that this economy desperately needs, under the Zimbabwe Agenda for Sustainable Socio-Economic Transformation banner.
This week we spoke to one of Zimbabwe’s young and successful entrepreneurs — Savanna Tobacco executive chairman Adam Molai (AM) on his thoughts on the economy.
VR: There has been so much negative sentiment in the economy even as the year begins. Do you think the economy has a chance to regenerate this year?
AM: If you look at economics, it is about sentiment. If you look at the stock market people invest on the basis of sentiment, what they expect to happen. So if you create a negative sentiment, to say things are going badly, it means anybody holding a position will be in a sell position. This means they will then get rid of whatever they have to protect themselves from what they expect will happen in the future in terms of the expectations. If we start by sending negative sentiments, how do we then expect to attract investors, because investors are just like the stock market. They want to go where there is a positive story. They want to go where they see hope for the future. Now if you as Zimbabweans are in the forefront of saying our country is doomed, our country is going nowhere, our politics is this, you are, therefore, sending negative sentiments about your own country. So if we want to get our economy right we start with our mindset. Yes the mindset has to be positive to make things happen, but you speak to a Zimbabwean the first thing you hear is zvakapresser (things are tight). So you start from a deficit position. For me I always say is the glass half full or is the glass half empty first of all, and secondly how do you want to look at something. Do you want to look at it as a challenge or do you want to look at it as an opportunity. For example, with the issue of water, you can either cry and say we have water challenges or you can say we have got a water opportunity. Because City of Harare or whichever city which is not providing water, it’s an opportunity for me to provide water. So that challenge is a challenge to those who want to cry. Unfortunately as Zimbabweans I think we have taken a position where we get together and spend six hours mourning and complaining about how things are rather than spending six hours finding solutions to those things we are facing. So I believe it’s a mind set and once we take that mind set and say look guys we are masters of our own destiny, there is nobody who is going to come from Mars and address what we are facing. The Chinese are not going to solve our problems. The British are not going to solve our problems. Zimbabweans are going to solve their own challenges by deciding to act rather than remain armchair critics. We are always saying Government must give me fertiliser, Government must give me seed but who is Government? It is you and me.
VR: This shift of the mindset, do you see it happening in the short term? What do we need to do immediately to get results?
AM: You know, as a country, we need to embrace business. We need to make doing business easier. We have had a Doing Business Report done by the Minister of Finance, another by ZIA (Zimbabwe Investment Authority) and yet another done by the Minister of Industry end of last year. Another one was issued just last week by the Deputy Chief Secretary to the President and Cabinet.
In the last 18 months we have commissioned more than six Ways of Doing Business reports. We have sent so many delegations to Mauritius and other places to study what they have done in terms of ways of doing business but we have done nothing about it. So if we want to grow, we have to do something about what we know should be done. It’s not that we don’t know what has to be done. We have done all the studies. We have got thousands of reports but we just don’t get to be doing what should be done.
VR: Why is that so?
AM: I think unfortunately Zimbabwe has become engrossed more in politics than in the economy. In my opinion business should drive what the economy should achieve. If we don’t have business at the forefront of driving Zim-Asset, it remains a political problem. Zim-Asset can only come alive when it is championed by industry. When you sit and say that we have tobacco, so which local entrepreneurs do we have who have championed that industry. We have maize, which local entrepreneurs do we have, we have cotton etc and those champions are empowered. Government’s role is to facilitate business. And until we have Government being the facilitators of business, we won’t deliver.
VR: But now giving an example of Zim-Asset, where are we getting it wrong, is it the Government alone that must be championing it?
AM: That is why we don’t deliver the expectations. These can only be delivered by the player on the field, not by the spectator. Government is the spectator. It’s not a player in industry. So it should be there supporting what industry needs. What commerce needs to be able to deliver for the nation. I know what tobacco industry needs and I am saying Government this is what we need. And if it makes that happen I should be able to deliver. I am an entrepreneur driven by the desire to deliver profit. But for me to deliver profit I need people, I need services. So as I am driving my objective of making profit I am also delivering Government’s objectives of growing industry, of creating employment, of creating a taxation base, ultimately providing social services.
VR: So if things are as clear and as logical as you put them, why is this not happening?
AM: For me it’s very simple, as I look at it today Government has not embraced business. You have a delegation that goes to China and there is not a single business person. It is all Government officials but they are meeting Chinese business people. Now China’s economy has been driven by business people so why negotiate with Government, which Government does not understand the nitty-gritties about business. And the bureaucrats . . . how many run tuck shops? So how can they negotiate a multi-million-dollar deal when they have not negotiated a thousand-dollar deal for their own tuck-shop? How do you know what level of risk is acceptable when you have never taken risk yourself? How do you know the pitfalls of putting together transactions when you never run a business yourself. I know the pitfalls in my industry and if I am sitting with another person offering me a deal I say this deal is a safe deal, because I know so from inside. But if you have never been inside how can you negotiate with an insider and expect to come up with anything. Look at South Africa, when they went to the DRC they took four jumbos full of business people. Yah isu we took one jumbo full of bureaucrats. Now that’s why I am saying Government should embrace business and know that we are symbiotic. We need each other. It is like fish and water. Fish cannot survive without water and similarly the water will not be same without fish.
VR: But why have the two parties, Government and business, failed to work together effectively for the good of this economy?
AM: Unfortunately, in the past industry and commerce was run by foreigners and as a result there was intense mistrust between the two. Mistrust that has been maintained even post the transition. Now even when business in the main is being run by local entrepreneurs, there are still legacy issues of the mistrust. The American business locally was running American interests. So there is that mistrust between business and Government. The British or Americans are trying to trick us but how as a Zimbabwean will you trick your own Government? But as a Zimbabwean whatever money I am making will be spent here because this is my home. If my mother needs a house I will build it in Zimbabwe. If my grandmother needs a house I will build it in Zimbabwe. So that money which has been generated will only grow Zimbabwe. We also have to migrate our institutions. I do not want to pick on any particular institution but CZI (the Confederation of Zimbabwe Industries) is a legacy institution. If you see CZI it has always been led by Zimbabwean managers not business owners. Business managers cannot make decisions when they meet Government. They say we have to go back to our principals and then come back to you with results. So you have a decision maker here and a manager there. What you need are two decision makers sitting together. Local business owners and Government sitting together will achieve something.
VR: But there seems to be more that divides Government and business than that which builds it?
AM: Yes, it was also business starting to get politicised. Some industry and commerce players got themselves messed up in politics and started running agendas contrary to what Government was trying to achieve and this created further mistrust. So the reality is we have to build trust and we have to find ways of building bridges between Government and local business persons so that we walk together to achieve objectives of Zim-Asset. Zim-Asset is a fusion of ideas, a statement of intent that now needs to be broken down to sectors. Have sector champions who are local players with the country at heart so that ultimately we make sure we achieve the objectives which will grow our economy, create jobs and allow us to build hospitals, build schools and all the social infrastructure that is required.
VR: Zim-Asset also says we need foreign investment as a source of funds but earlier on you intimated that we are busy chasing away investors. So from your perspective what can be done to attract meaningful investment and get the programme going?
AM: This issue is a double-edged sword that has to be managed effectively. On one hand we say we need to localise our economy so that the decision-makers are locals so that when there are moments of disagreement between the investors and locals we do not have foreign investors taking precedence over our own. That is key, unless you control your own economy in partnership with foreign investors you won’t have sustainable businesses, so what we need is sustainability. Now for that sustainability to happen we need to make sure our policies are consistent. I have always joked that if you put four ministers in different rooms to speak on indigenisation, an investor will come out with four different Government positions on the policy. So unless we have that policy consistency where we speak with one voice on key policy issues it is very difficult to attract foreigners. But let me prefix this by saying charity begins at home. If I as a Zimbabwean do not have the confidence to invest in my own country because our policies are not friendly, how do I get a foreigner to invest in my country. What is stopping us from investing locally?
VR: Could it be lack of capital?
AM: No. We must stop giving excuses and be honest with each other. As locals we also have confidence problems. We do not feel very secure to make investments. So if I as a local am not feeling secure enough to make an investment in my own country, how will a foreigner feel secure?
I will give you a very bad example. As a company we have taken a position but for SADC we did not need any other factories. What we only needed were our factories in Zimbabwe and supply duty free to any other SAdc countries. But next week our factories will be open in Mozambique. It is because our own policies locally are not supporting what is required to have a vibrant industry. We have Dubai, it does not produce 1kg of tobacco but is producing 17 times the number of cigarettes that Zimbabwe is producing. But do you know what makes it worse, the key provider of the (not clear) which is the one step before the cigarette manufacture is a Zimbabwe invested in Dubai because they don’t have the confidence in investing in Zimbabwe. What is it that is making our own people not to have the confidence of investing in their own country? Investing in a country like Dubai and create an industry in Dubai 17 times than the size of ours. When there is 10 times minimum value to multiply between tobacco and cigarettes. I keep saying 650 we are earning from tobacco if you convert to cigarettes that would be 6,5 billion. That same tobacco. How many jobs. Let’s look down vertical lets look at it horizontal that it will create. That is just one industry how we can transform it by not doing anything. We don’t need money from that all we need is enabling environment. That enabling environment is proving difficult
VR: What do you mean by enabling environment?
AM: We need to have an understanding of what we call a national interest and in Zimbabwe that is something we are going to drive as a matter of policy, as a matter of national education, as a matter of culture and socialization. We do not understand national interests unless its politics. In politics we understand national interests, when it comes to business we don’t. We have security agencies arresting a foreigner who is coming to buy 100 cigarettes here in Harare south and harassing them because they are carrying cigarettes. What is it that causes cigarettes cause so much headaches when we grow the tobacco? Why is it that our farmers can travel with raw tobacco and its okay? Why it is when we export raw tobacco nobody is interested but suddenly when we export cigarettes everybody is interested? We do not understand the agenda behind that. We do not understand that foreigners do not want Zimbabweans to industrialize tobacco industry because it creates a threat to their foreign interests. But what do we do we support it under guises that we do not understand. We allow trojan horses into our environment who are working for a foreign company against the interests of Zimbabwe then we expect that our cigarette industry will grow. Dubai is liberal. The producers of cigarettes in Dubai they produce the cigarettes and they export them. Government doesn’t bother the people who come and buy and say where are you taking them, where and why. They let them buy because they want the foreign exchange and they make them take them where ever they want to. China does not follow the exports and say where is your shirt gone, where has your pen gone where has your glasses gone. They just want to know that the products have left China but we as Zimbabweans we are more interested about what is leaving our country than what is coming into our country.
So what do we end up with? We end up with a trade deficit that we have because goods flood our market without paying duties. You put resources towards where other people should be sourcing. We should be seen that we do not have leakages. We are happier with cooking oil flooding from South Africa but we are worried that by the way our cigarettes could flood South Africa, so what. We arrest foreign nationals and make them spend 24 hours detyained because we are investigating you, why, because people don’t understand what is called economic interests. National economic interests.
Why did Obama put sanctions in North Korea recently? Because of American economic interests over Sonny, the maker of a movie. America has put sanctions to a country to protect their business. But we attack our own business because we don’t understand national economic interests. Until we understand the concept of the national economic interests our country is not going to go anywhere.
China understands national economic interests. They are doing everything they can to make sure their goods are flooding everywhere. Have you heard China asking their nationals have you paid duty in Zimbabwe? They are not interested. You are saying. They want to flood the whole world. They wouldn’t that are you paying your duties and the stuff, no.
AM: America has put sanctions on a country to protect an American business but we put sanctions on our own businesses. We allow foreign agencies to spy on our own companies and we do nothing about it because there is no national interest. People have been paid a few dollars to go against the interests of your own nation. Whose interests do we protect if we cannot protect our own national economic interests? So until and unless we understand that we have to look after our own. You know, I will give you a very bad example as Zimbabwean how have given food to your neighbour yet you have got your own child mumba mako who is suffering from kwashiorkor but you are more interested in feeding neighbour’s child who is obese. That’s what we are doing. Yaah we are allowing imported cooking oil to flood the market and stopping our own exports to protect this neighbour.
VR : Do you anticipate things could be different this year?
AM: Can I tell you something? I wonder if we actual want this economy to tick. All the economic ministers, we have had them here (at Savanna). All the security leaders, we have them here. Every single one of them is saying this is what our country needs. We say we need two of these and we will excel. But they do nothing to fix the problems we say are there and we say that is the role of the Government not to try and run business but to facilitate for the business to operate. Tell me something here. China is the largest consumer of cigarettes in the world. We go to China knowing that. We are happy selling China raw tobacco. We don’t take our cigarette entrepreneur with us. To say China 1 percent of the tobacco you take from us must be in cigarette form. Instead we say no no no if we do that we might upset the Chinese but they are taking our diamonds for free and what are we getting in return. Again its a failure to understand strategic national economic interests. The Chinese are selling us finished goods only and they are buying only raw material from us. All we are doing is substituting the British with the Chinese. That’s what the British used to do. They used to buy raw material and sell us finished goods. Now the Chinese buy raw material and sell us finished goods. It’s the same scenario. Nothing has changed. So what is the difference between one colonisation and the other? It’s all colonisation. If we beneficiate our goods in line with Zim-Asset and then get those people who say they are our friends to embrace and take it. If you are my friend you buy from me. But if you are a fake friend you tell me why you won’t buy mine and buy somebody else’s. You must support me in a manner that is good for my people not in a manner that is only good for your people. So what we need to do if we start together as Government and industry and we say there is a trip to China and we then come up with a 6 point plan and we agreed on our strategy. And we went there knowing that guys we going to get the strategy for tobacco like this. We are going to drive the strategy for cotton like this. We are going to drive the strategy for gold and diamonds like this because the Government has got the input from the people who are in the respective sectors. Then we would have amazing deals which will take our country forth in a manner where nobody can expect.
VR: That would really be the day. We need to get our industries firing again isn’t it?
AM: Our issues for me are very simple. They don’t need much to address them. All of these issues you see it’s the mind set. To summarise it in a very simple way we don’t need money. Money is the root cause of our failure to innovate. I always say we start this business with no money. We start it with innovation and then the innovation creates the money. You take away that money and people start thinking.
In God I trust!
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