NewZimbabwe.com Business Reporter, Alois Vinga (AV) recently caught up with businessman Shingi Munyeza (SM) for a one-on-one discussion on the country’s economy and his personal experiences as a successful businessman.
Munyeza was chief executive with hotel chain, African Sun for 13 years before stepping down in 2015 to pursue personal interests. In some of his achievements, Munyeza has brought some of the most prestigious food franchises into Zimbabwe.
Below are excerpts of the interview. (The interview was recorded before the monetary policy statement by central bank governor John Mangudya last week)
(AV) How do you find business in the country?
(SM) Admittedly, the environment is tough but this is when true entrepreneurs are born and revealed. The environment however offers opportunities to create, invent and innovate. That’s what I have been focusing on.
(AV) Please share with us the challenges and opportunities you are referring to.
(SM) We have an economy that is now debt-ridden, a currency crisis, low productivity levels, deindustrialization, trade deficit, high sovereign risk negating FDI, a blotted government with a shrinking tax base, and a political crisis blighting the prospects of an enabling environment.
(AV) Doing business in Zimbabwe has not been easy, what has kept you going?
(SM) Indeed, we have had a fair share of cyclical crises which have been mainly driven by our bad politics. This, however, has not taken away the potential for Zimbabwe. I have made most of my wealth in Zimbabwe and I have also made most of my losses in Zimbabwe, high risk high returns. Zimbabwe is my home and I have learnt to master and appreciate its geopolitical and socioeconomic environment. Above all, I believe through my entrepreneurial intervention I will be able to contribute to the development and transformation of my country.
(AV) You used to be specialise in franchises and you have now refocused your investments, which areas are you now specialising in?
(SM) I still have residual investments in the hospitality and tourism sector. Three years ago when the bond note was introduced against logic and economic dictates, I decided I would change my focus since there would soon be a currency crisis which we now find ourselves in. I then ventured into renewable energies, starting with solar power generation, ICT, e-commerce, and enterprise incubation.
(AV) What prompted the move?
(SM) All these businesses were ventured into so I can offer solutions in our energy deficit, developing the informal sector, take advantage of the youth divided and technological innovations to leapfrog into the fourth industrial revolution whilst creating an entrepreneurial base which is the basis for sustainable economic development led by the private sector.
(AV) In enterprise incubation, are youths coming through and generally which trends are you observing?
(SM) Our enterprise incubator is for the developing of entrepreneurs and acceleration of start ups and SMEs to become sustainable and scalable. Most of the processes will definitely be focused on young people and women. We are now tying up agreements with corporates, DFIs, Government and tertiary institutions so we have an integrated approach to raising entrepreneurs and enterprise acceleration.
(AV) From your own analysis what is the general outlook for the country’s hotel sector?
(SM) The tourism sector has experienced unprecedented growth in the past 12 months, the best in over 20 years. I believe this will be sustainable, however our pricing and high destination costs will slow the much needed growth. There is also need to expand the product offering and develop the requisite infrastructure for efficient and effective accessibility. The recent violence in the country and cholera outbreak has also sent the wrong signal into the source markets. Overally, the outlook is positive with forward bookings in line with expectations.
(AV) Now currency reform issues are affecting the entire business community, what do you think needs to be done to find a lasting solution?
(SM) Zimbabwe, like any other country needs to have its own currency. However, this must be done in a background of confidence in the way the economy is being administered. The multi currency system is no longer sustainable especially with the strengthening of the USD which has made our cost base high compared to regional parity, hence making our exports more expensive and uncompetitive which then widens the trade deficit. The forex retention system has driven away exporters with some now threatened with closure. The rate of 1:1 between the bond and the USD is a fallacy that needs to be dealt with immediately. When the 2019 budget was pronounced, we should have immediately followed it up with a corresponding monetary policy which up until now as I write there is lots of speculation thus eroding the much needed confidence in currency stability. We therefore need a clearly articulated road map in bringing back our own currency and interim measures so we have less speculation which militates against confidence building. Some economic commentators have proposed that we go the Rand route, I don’t agree with that because the Rand has its own systemic challenges which will soon have a contagion on us. Using the Rand is merely kicking the can down the road where we will still have the same problems we are having with the US dollar. Government must show leadership and discipline in this area.
(AV) Can share any other details within the context?
(SM) Our real problem in our economy is because of our toxic and polarized politics over the years and recently arising from a contested election result which has given a legitimacy question. The subsequent military intervention on demonstrators in August and January has entrenched the belief that the state has now been militarised in turn sending investors away due to perceptions of lack of rule of law. This is the elephant in the room. If we are to deal with our economic sustainably. It is therefore incumbent upon our political leaders to engage in an inclusive, genuine and non-conditional dialogue process which will give birth to confidence and credibility to drive national vision and sustainable economic development.