By Andrew Lampard
FOR the longest time, Zimbabwean companies have been screaming at government to provide them with a protective sheath to keep external competition at bay, with some measure of success.
With globalisation and the world converging into one gigantic market of nearly eight billion people, isn’t it time they stopped limiting themselves and move away from the notion that they exist to serve only 15 million Zimbabweans, if at all?
Assuming one company has a 100% market share of the Zimbabwean market, even at its best, that can only be 15 million people. When you take a look at the Southern African Development Community (Sadc) regional bloc comprising of 13 nations, this increases the market to 300 million people, most of whom share the same cultural and traditional practices — making it possible for good products or services to be acceptable to most people within the regional grouping.
For instance, SeedCo, the Zimbabwean seed company, has over the past few years embarked on a huge regional expansion programme, supplying seed maize, soya, cotton and other seed varieties to markets in the region.
The African continent has a market of 1,2 billion people, far eclipsing that of Sadc, so for Zimbabwean corporates to grapple and fight for the small market of 15 million people when the huge market of Africa beckons speaks to corporate Zimbabwe limiting themselves.
For many years, we have seen successful organisations emerge from Africa.
Old Mutual, founded by John Fairbain in Cape Town in 1845, is now a well-known global brand.
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Another example is Anglo America Corporation, founded by Ernest Oppenheimer in 1905, much like Standard Bank and Liberty Life.
While Zimbabwe has a few brands that make us proud by having successfully gone regional, we need more companies to follow Econet, Meikles and SeedCo’s example.
Few local companies have dared to venture outside their comfort zones, citing the “difficult operating environment”.
But as incomes shrink because of hyperinflation and the changing face of shopping behaviour patterns due to ICTs, reliance on the domestic market alone is no longer viable. The search for new markets and frontiers must be the only game in town.
Across the world, trade barriers are being knocked down through the formation of regional blocs that signal a seismic shift towards integration. The future, therefore, belongs to strong brands that can stick it out in the jungle.
To successfully compete in this arena, Zimbabwe’s corporates will need to shape up.
Billionaire Strive Masiyiwa dared to dream in the 1990s and today his Econet Wireless Zimbabwe (EWZ) is reaping huge rewards from its expansion across Africa, Europe and the East Asia Pacific Rim.
The EWZ founder fought a bruising battle with former president Robert Mugabe’s regime to get an operating licence in 1998, which, perhaps, informed his decision to minimise Econet’s exposure in Zimbabwe and look at opportunities in the global market.
Headquartered in South Africa, Econet has firmly established itself in Botswana, Burundi, Kenya, Lesotho, New Zealand, Nigeria, South Africa and the United Kingdom, where they operate each of their businesses as stand-alone entities.
The Econet story should be an inspiration to other local brands that have become household names in Zimbabwe, but are still to make a mark beyond the country’s borders. The case for regional expansion, though fraught with dangers, is imperative for our growth.
Zimbabwe’s population of only 15 million people, of which a sizeable number have left the country in search of greener pastures, must only be a launching pad for brands that aspire to play on a regional, continental and global scale.
Considering that the continent of Africa is home to about 1,2 billion people while the world has a combined population of 8 billion, the global market offers several advantages, including greater opportunities for market growth, diversification as well as access to talent, foreign investment opportunities and a competitive advantage.
Nyaradzo Group, one of our home-grown Zimbabwean brands that operates a unique financial services model, could be our next best foot forward in the quest to have more continental and global brands.
Founded by Philip Mataranyika, an ex-Old Mutual employee, Nyaradzo has established a solid presence in Zimbabwe over the past 18 years — commanding a market share of more than 60% in the funeral services sector and ranking third among the country’s leading life assurers.
Their story has been a fairy-tale whose target from inception may well have been to create a global brand.
After leaving a promising career at Old Mutual in 2001, the affable Mataranyika teamed up with his wife, Mavis, to form Nyaradzo in March 2001 and before the company’s eighth anniversary, it had overtaken market leaders in the industry.
Their entry point into the financial services sector was circuitous.
They first took their funeral business to uncharted territories by revolutionising last rites into events that became platforms for families and friends to celebrate the lives of their loved ones who would have crossed over to meet their maker.
In subsequent years, they branched out into manufacturing through Calundike Exports and insurance broking by way of Eureka Insurance Brokers, before they took a giant leap into life assurance, where the group now operates Nyaradzo Life Assurance Company.
At that point, it became clear that Nyaradzo was not stopping until they joined the big league.
The company is now a fully integrated financial services concern, recently incorporating an asset management business and a bureau de change.
The idea of adding asset management and bureau de change facilities is a game-changer in building that critical mass needed to spring into the region and across Africa, where their funeral services business could flourish since there are a lot of similarities in the way Africans bury their dead.
The bureau de change provides Nyaradzo with an opportunity to mop up foreign currency which they could use to meet their import bills for buses, hearses, spares, chemicals, graveside equipment, among others, under the current foreign currency shortages that the nation is facing.
If the Group can tap into its monstrous client base for support, the asset management company should be able to give Nyaradzo access to investment funds, which they can use to further strengthen their home-base and build a war chest to support plans they might have for the region, continent and globe.
On the other hand, Sahwira International Plan (SIP), their funeral and repatriation services product, created for the diaspora, could give them wings to fly into spaces where Zimbabwean citizens are found, anywhere in the world.
Their establishment of service units in South Africa and more recently in England could open a vital door to capital markets that can enable them to weave their way into the rest of the continent and world through mergers, acquisitions, management contracts or franchises.
Nyaradzo’s balance sheet has been strengthened by a substantial real estate portfolio and land bank, including a 75-hectare piece of land in Chishawasha, which they are likely to turn into a cemetery given the shortage of burial space in Harare and elsewhere.
A significant player and a front runner to regional and continental growth, Seed Co has already proven that it can be done.
Seed Co has managed to grow its continental footprint by expanding across Africa, leveraging on the power of the “Seed Co” brand equity and superior seed products which are adaptable to multi-geographical settings.
The company, in partnership with Limagrain’s affiliate, HM Clause, has ventured into the breeding and distribution of vegetable seed business on the African continent under the Prime Seed Co brand. It has registered operations in Botswana, Ghana, Kenya, Malawi, Nigeria, Rwanda, South Africa, Tanzania and Zambia.
Other top local brands that should join continental powerhouses such as Dangote, Old Mutual, Standard Bank, Anglo American, Bakhresa and Ecobank in expanding their footprint include CBZ Holdings, Innscor Africa, FBC Holdings, ZB Holdings, Masawara and African Sun.
Aliko Dangote, founder of the Dangote Group, has built an empire with an annual turnover in excess of US$3 billion, taking his business from his native country Nigeria into countries such as Benin, Cameroon, Ghana, South Africa and Zambia.
Bakhresa Group started in Tanzania and is now one of the leading industrial houses in East Africa, with operations in Kenya, Uganda, Malawi, Mozambique, Zambia, Rwanda, Burundi, South Africa and Zimbabwe, where they took over former Blue Ribbon Industries.
Ecobank, whose official name is Ecobank Transnational Inc, has consolidated its stature as a pan-African banking conglomerate, with banking operations in 36 African countries.
It’s a feat that a few African airlines have also achieved global brand status by rapidly expanding the number of countries that they serve, often establishing routes and stations ahead of actual passenger demand.
Ethiopian Airways flew to 36 nations in 2016, up from 24 in 2006.
Royal Air Maroc serves 30 countries (twice as many as in 2006).
Air Côte d’Ivoire flies to 17 countries, and RwandAir to 16. African airlines are making intra-African air connectivity — a prerequisite to economic integration — a reality.
Telecom operators and media companies are doing their part to advance pan-African connectivity and communications. The West Africa Cable System, an alliance of 12 operators, has connected 11 African countries and Europe, while a separate alliance of 20 operators has connected 17 West African nations and Europe.
As a result, internet penetration in Africa passed 30% in 2016.
African and international media companies are facilitating the free flow of information, ideas, and personal connections through their space as well as through increasingly high- profile meetings and events.
Despite the economic challenges, there is never going to be a perfect time for Zimbabwean companies to expand into the region and beyond. If our companies are to grow, they have to take the leap and go beyond our borders.
Andrew Lampard is a retired banker who worked in Zimbabwe and South Africa. For views and comments, e-mail to [email protected]
