MANAGERS in Zimbabwe have been forced to throw away their management textbooks.
The crisis in Zimbabwe has prompted company managers to develop unique capabilitie
s in a time of profound economic decline.
Short-termism and crisis management are the order of the day and managers say long-term business planning is impossible. Managing by the textbook in such an economy is irrational, they say. The manager of a food chain says he has a planning cycle of “all of 24 hours”.
He says most of the crucial decisions he has made over the past three months have been about the value of money in a country with a dual interest rate.
Key features of the Zimbabwean economic meltdown are dual interest rates, a critical shortage of hard currency with which to buy manufacturing and industrial supplies, and non-existent agricultural inputs. Commercial agriculture, once the backbone of the Zimbabwean economy, is dead, and the manufacturing sector is running on average at 30% capacity.
Prices of basic commodities fluctuate wildly and hyper-inflation is rampant. Productivity is low, labour is expensive and rent-seeking behaviour – arranging special favours – is rampant.
The recent humanitarian crisis (Operation Murambatsvina and Operation Restore Order) in which more than 135 000 families have been made homeless has disrupted the workforce. Some factories are production lines during the day and dormitories at night.
“My factory has become a makeshift home for the newly displaced and I as a manager have turned into a dispenser of soft loans to my employees and a social worker and counsellor all in one,” says one businessman.
The managing director of a packaging company says government policy has turned most business people into criminals. He says government has created many rules and structures that are not conducive to business activity. He gives the example of the foreign exchange auction market set up by the central bank. Through the market, government presides over who is to get an allocation of scarce foreign currency.
Yet the chances of a business getting foreign exchange are small. So companies split their bids, using third-party agents to bid for forex. Since their chances of getting forex are about 2%, managers feel they are engaged in a lottery rather than a rational money market. Unable to raise money officially to meet their obligations to suppliers, businesses turn to the parallel market for forex, or have to shut down.
Few businesses have not received “little visits” from the economic crime unit in President Robert Mugabe’s office.
Often the visits are prompted by a special allocation. Managers often petition the Reserve Bank for extra allocations of forex and argue that without these they will have to close down.
Those that are able to convince the bank receive a stack of foreign currency and then a “little visit” to ensure that the money allocated at a special rate is being used for the purposes intended. A hotelier says managers have become good at reading the nuances of economic and political policy and adapting accordingly.
He says resilience is fast becoming one of the defining characteristics of those businesses that remain open. Many manufacturers are highly indebted to suppliers of raw materials in South Africa and most have run out of credit.
A bank manager says strategic planning is difficult because all economic interventions – even small ones – need political support. He asks: “How do you give a loan to a white farmer who has good credit and a solid balance sheet, when there is no guarantee of the security of his tenure on the land or his property rights?
“Our managers are having to design politically inoffensive stakeholder-based plans .
“This is making the managers very strategically astute.” – Financial Mail (South Africa).