Open Economy: The other weak institution

01 Nov, 2015 - 00:11 0 Views
Open Economy: The other weak institution Sunday Mail

The Sunday Mail

Numerous political economists across Africa have advanced the notion that many of the governance and socio-economic institutions across the continent were adopted from colonial times.
The notion is placed within the context of a suggested mismatch between colonial institutions and indigenous African cultures.
It is a credible argument that institutional adoption and the resultant cultural mismatch are significant contributors to our economic struggles.
However, divergent from common solutions proffered by some political economists who suggest the complete redressing of colonial institutions, I am in preference of a progressive outlook which emphasises modern day realities if we are to seek aligning solutions.
All cultures world over are fluid and ever evolving.
African cultures have advanced from pre-colonial times and to an undeniable extent have embraced and voluntarily merged with colonist customs.
Perhaps the greatest deficiency found within the discourse of institutional adoption and cultural mismatches is how political economists seem to have ignored the most retained institution of all — the business enterprise.
The business enterprise is an institution representative of the behaviour and relationships that we have accepted as a fundamental part of our economic culture.
It is a legal entity that retains the social contracts and expected conduct that we uphold as our economic culture.
Thus by interrogating our perceptions and understanding this micro-institution, we can identify strengths and weaknesses within our economic culture that then further manifest themselves at the more visible higher level of governance and socio-economic institutions.
Such a method of analysis is extremely necessary in Zimbabwe at the moment.
We seldom interrogate our perceptions and understanding of the business enterprise, yet it is the most common institution in our economy.
We can do an analysis on two fronts — the internal and the external. Internally, the business enterprise is where we do most of our living as a society.
The average work day is from 8am to 4pm, roughly making up over 70 percent of our woken day spent within the institution.
A National Employee Engagement Report compiled in 2014 revealed that 43 percent of our workforce suffers from stress.
By the amount of time that we legally expect our society to be at the workplace, the business enterprise is supposed to effect considerable ease or exacerbation.
However, do we instil that responsibility on the business enterprise?
I would argue that we do not.
Instead, our perception of the institution is not necessarily one where it is supposed to be a place of mental and emotional harmony.
The majority of companies see it as beyond their scope to offer such intangible comfort, finding it to be outside of business necessity.
Yet, employee satisfaction has been proven to enhance productivity.
Contrary to popular belief, the business enterprise is not merely a place where we go to work. It is also an institution that should offer society intrinsic comfort.
It is no coincidence that the most successful companies worldwide often appear as leaders in “Best Companies to Work For” lists, and not just because of the salary. Likewise, it wouldn’t be coincidence if most of the unproductive and failing local companies are also the most miserable to work for!
It is quite unfortunate that our Civil Service, which makes up the greatest number of employees under a single institution, have been often portrayed as the impediment to our economic growth.
The way we talk about the bloated Civil Service has become very toxic.
Other institutions in the private sector have followed suit, inheriting this aggressive posture to their workforce. The social contracts that exist within the institution of business enterprise in Zimbabwe are poisonous! Another internal consideration is the culture of hierarchy and its interaction. Hierarchy affects decision making, fusion of ideas and efficiency.
While our adopted culture of business hierarchy, which is largely British colonial, may have been effective in an industrial UDI economy where work processes were compartmentalised, it has become obsolete.
Today’s idea and creative driven economy requires cross functional tasks and more integration by multiple parties in the workforce, regardless of position.
Many companies retain very rigid vertical structures of hierarchy that are uncompetitive in today’s global economy.
The time that it takes for a decision to pass in most companies is too long and subject to multiple bottlenecks.
Companies culpable of such hierarchical structures may need to reconsider the cultural influence of such design.
Moreover, it is this culture of hierarchical enforcement that breeds the excess remunerations and corruption in many business enterprises.
The upper echelons in these institutions, public and private, carry a sense of entitlement. It is the belief that having reached a certain level of hierarchy, title warrants material accumulation.
Externally, we can greatly improve our understanding of the institution that is business enterprise, especially within the context of economic value.
Businesses should exist beyond profit motive.
Recognised as a legal entity, a business enterprise should be an institution that contributes to the expansion of social desirables through its practices.
This is also a significant context for value addition and product utility. Our businesses must aim to offer the highest satisfaction to consumers through products and offerings that enhance the economic quality of life!
For instance, it was commendable to ban the drink “Dragon”.
Food processors must not only offer products, they must do so in a manner that improves the country’s nutrition. There is economic value in businesses acting in such a manner, as it reduces health care costs while enhancing workforce competence. This applies to business beyond food processing.
We have lost significant economic value by business enterprises abiding to the single purpose of profit in Zimbabwe.
Even though it does not necessarily reflect in annual GDP figures, the conscious legislative choices of the kinds of business enterprises that are operational in an economy either increases or decreases the economic value within that economy.
Admittedly subjective, Zimbabwe has had many revered indigenous businesspeople, some more flamboyant than others, yet I have never been able to identify the economic value beyond the profit motive that their businesses have added to the economy.
I also suspect that this is a manifestation of our somewhat deficient perception of business enterprises as means towards economic value that is not monetary in form.
This is evident in the subtle defeat of indigenisation credits, a mechanism which offered potential to extract significant economic value from foreign owned enterprises.
In terms of competitiveness, our perception of business enterprises is uncompetitive.
For instance, business enterprises preserve, promote and commercialise a nation’s customs and traditions.
Our institutions have failed in this light, as a result the highest import into Zimbabwe is foreign culture. It comes in the categories of entertainment, dress, luxury, dining, etcetera.
Conclusively, there is a lot of talk about how in Zimbabwe we have weak institutions; specifically, governance and socio-economic institutions.
That argument is true and should be advanced further. However, we seem to have overlooked the most common institution of all in our economy; the business enterprise.
There are a countless number of such institutions in Zimbabwe, and as many of us are venturing into starting our own SMEs too, we should be cognisant that we are adding another institution into the economy.
As we do so, we should ask ourselves; are we content for these institutions to be representatives of the behaviour and relationships that are fundamental to our economic culture?
From what we have thus far, what does our current economic circumstance tell us?

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