The Sunday Mail
Patrick Zhuwao
Are Zimbabwean CFOs and business leaders idiotic, or is the Deloitte report nonsensical?
As we seek to accelerate Zim-Asset’s implementation, we need to review the performance of the leadership of the institutional sector partners who should be charged with that nationally critical responsibility; namely public sector players, private sector businesses, and civil society.
Civil society confirmed that they are mere appendages of political parties during the constitution-making process when everyone agreed that each and every so-called NGO was aligned to the three political parties to the Global Political Agreement.
As such, the leadership of civil society cannot be evaluated independently as they are subsumed in the political leadership.
The political leadership has been reviewed through both national universal partisan processes over the past year-and-a-half.
The national universal process found expression on 31st July 2013 and reposed the leadership of Zimbabwe in President Mugabe in a categorically clear and unequivocal manner.
Partisan processes have gone through detoxification and jettisoned dead wood, chancers, opportunists and turncoats.
It is now obvious that these rejected paper tigers are reactionary lap dogs of imperialism (zvimbwasungata) who are unable to “withstand the rain and wind” as described by Mao Zedong in 1956.
In this penultimate instalment of the series on accelerating implementation of Zim-Asset, I interrogate the role of our business leaders by citing CFOs and accounting professionals.
I will unpack the Deloitte Zimbabwe CFO 2014 Report and argue that, in my view, that it is flawed in substance, content and process.
I will then submit that the accounting profession has the skills, capacity and competences to contribute towards addressing some of our economic challenges, as a case study, by using International Financial Reporting Standards within the context of Zimbabwe’s transformational aspirations as reflected in the outcome of the national plebiscite.
I will conclude by proposing that business leadership should re-engage and reconnect with Zanu-PF to accelerate implementation of Zim-Asset and engineer and structure development and growth of their sectors and individual businesses within the parameters of national objectives.
The Deloitte Report
My major gripe with the Deloitte Report is that it makes our Zimbabwean accountants look like idiots.
I hope and pray they are not.
I find that the report is not only a gross insult to Zimbabwe’s accountants, but is also patronising and racially derogatory of black Zimbabweans as a whole and disrespectful of our nation state.
There are several major issues of contention which include the last line or sentence on the online document I reviewed, which reads: “Designed and produced by creative services at Deloitte, Johannesburg (808469/ver).”
I will address the presentation of the report then look at the content and substance before concluding my analysis with a prayer to Tich Mudede and other so-called professionals.
The outsourcing of the design and creative work is indicative of a lack of confidence in Zimbabwe’s ability to conduct such mundane tasks as communicating the feelings of Zimbabwean accountants to Zimbabweans.
What an affront!
The product, from a creative and design perspective, is distinctly un-Zimbabwean and as such seeks to downgrade, devalue and demean our great nation state.
All 11 pictures in the report are about mountaineering, a decidedly useless and futile activity. I say this from the experience of having engaged in rock-climbing as a hobby during my secondary school years over 30 years ago. All it did was eliminate my fear of heights.
As if that was not enough, three of the five pictures that have human beings have whites whilst the ethnicity of the people in the other two pictures is indiscernible.
Even if they were black, does that mean that they should not be recognisable and only be silhouettes?
Deloitte chose to ignore the 2012 National Census which determined that 99,7 percent of the people in Zimbabwe are black.
The picture on the cover shows a snow peaked mountain, whilst the last picture shows a white man hanging onto a rock cliff over-hanging a sea.
We do not have snow peaked mountains in Zimbabwe. We are in the tropics. We do not have a sea in Zimbabwe. We are landlocked.
Surely, even if the design concept was about adventure, we could have visuals of mountaineering in the Eastern Highlands or Matopos, bungee-jumping off Victoria Falls Bridge, tiger fishing on Lake Kariba or even water skiing on Lake Mutirikwi.
This is made worse by the fact that the name given to the pdf file starts with the Internet domain handle for South Africa: ZA_CFO_Zimbabwe_19112014.pdf.
These issues of presentation are not petty. I consider them to be serious subliminal agenda setting designed to disempower Zimbabweans and engender serious feelings of inadequacy and inferiority.
This report cannot, by any stretch of the imagination, be a Zimbabwean product. It is a foreign product about Zimbabwe to further foreign interests.
Flawed Structure
But what is the content and substance of the report?
The report has a foreword, summary and statistical results of seven indicators, which include regions for future expansion, expected company performance, cash flow priorities, industry concerns, risk factors, business strategy, and top job stresses.
Although the foreword indicates that the views of CFOs are canvassed on nine issues, only three of those issues are dealt with in the report.
It excludes six of the issues mentioned in the foreword, opting instead to introduce four alternative criteria. Surely, a report whose structure is discordant with its intended objectives cannot be taken seriously!
Let’s give Deloitte the benefit of doubt and interrogate just a couple of the issues in the report in detail.
I will look at regions for future expansion and expected future performance for illustrative purposes. I will not touch on the issues that Nathaniel Manheru addressed in The Herald of November 29, 2014; industry concerns and risk factors.
As Manheru opined, some within the business sector gambled on the wrong horses during both the 2013 elections and in Zanu-PF leadership going towards the 6th National Congress.
Those lost souls need to review their positions. They must go with the flow.
With regards to regions for future expansion, the report cites 20 percent of companies seeking to expand regionally, of which 12 percent are eyeing South Africa.
Why report on the 20 percent minority? Is this report not meant to gauge the likelihood of Zimbabwean companies seeking to compete with South African companies and pre-emptively discourage the business community from regional expansion?
Surely, it would be more instructive to interrogate what is informing and influencing the remaining 80 percent of companies against regional expansion and try to understand why.
On expected future performance 71 percent of respondents indicated that they expected improvements in 2015, and 81 percent in 2016, against 46 percent of respondents who expected company performance to improve in 2014.
The narrative is at odds with the statistical representation, let alone the fact that the labelling on the graph indicates reference to CFOs in the region as opposed to the report being about Zimbabwean CFOs.
A Prayer for Mudede
I wish to make a plea and prayer to Mr Tich Mudede as a compatriot I have known for over 30 years since our high school days.
Mr Mudede co-signed the Deloitte report with Mr Roy Cmapbell. Your signature, Mufakose, is valuable. It represents your integrity, professionalism and probity. Musaiseruokorwenyu, Hwata, pane matakanyanyaanosvoropodzamabasaenyunenyikayenyu.
All professionals are enjoined to ensure that they critically examine these reports and processes that seek to undermine business operations and confidence in Zimbabwe.
Those of us who operate within the political sphere have chosen to hold our political leaders to account.
We have passed votes of no confidence in leaders who fail to deliver and refused to renew their mandates.
Because the business sector is an important component of our socio-economic transformation, business leaders must also be held to account for their actions.
This is more so for listed companies funded by institutional capital built on the contributions of ordinary Zimbabweans.
As actors in the political arena, we will start by talking nicely with the business leaders to mend their ways. If there is no positive change, the wind that blew within Zanu-PF can also blow within the business fraternity.
International Financial Reporting Standards
I believe that business leaders can contribute positively to our development in pursuit of the Zim-Asset vision, “Towards an Empowered Society and a Growing Economy”.
There is no business leader who does not want the economy to grow.
I will demonstrate that business leaders can integrate the knowledge that they have with social imperatives and political realities to yield mutually beneficial outcomes.
Despite not being an accounting or financial person, I will use the accounting profession to demonstrate my thesis.
I believe that the accounting profession can develop some of the solutions to our economic challenges.
I wish to use the International Financial Reporting Standards, and in particular the Canadian National Instrument (NI) 43-101for the standards of disclosure for mineral projects.
There are several such instruments in different jurisdictions which serve the same purpose. Central to NI 43-101, is the position taken by progressive Zimbabweans that the mineral resources in Zimbabwe belong to the people of Zimbabwe.
They are God-given and cannot be renewed.
To be able to realise value out of these mineral resources, they must be mined out of the ground, beneficiated and value added to them. However, the process of mining requires that investments be made up front to develop the mining operation. These investments require to be funded.
The funding of any business ventures is dependent on the ability of the venture to provide sufficient revenues to cover costs as well as a return for the funder. It therefore becomes necessary to be able to establish the level of revenue inflows out of any project.
Revenue inflows from any future mining project are dependent on the prices and quantities of the minerals.
Mineral prices are known on the various international markets.
However, the quantity of the resource in the ground cannot be known unless exploration work is done.
Once we know the quantity of the resource that is in the ground and we are aware of the prevailing commodity prices, we can forecast the revenues that can accrue to a project.
The ability to forecast revenues will unlock funding provided that there is proof of ownership and quantification of the resource, and that there is demonstration of capability and capacity to extract the resource.
The proof of ownership and quantification of the resources is normally provided through NI 43-101 or similar instruments.
According to online references, NI 43-101 is “a codified set of rules and guidelines for reporting and displaying information related to mineral properties owned or explored”.
This is why Government wants to establish an exploration company so as to be able to generate the NI 43-101.
However, exploration requires money. Where will Government get it?
We can take a leaf from the arrangements made by house owners with estate agents and tenants.
A house owner can negotiate with an estate agent for to repaint a property prior to letting it out.
The agent would then recover their costs for repainting, as well as their fees for managing the property, from the rentals paid by the tenant.
In this analogy, the property ownership does not change despite the repainting done by the agent.
The painting represents the exploration work which makes the property more attractive.
There is a suggestion that potential miners should pay an upfront signing fee to be used for exploration. The contract miner can mine for and on behalf of the country, and be paid from the revenues.
This conceptually means that Zimbabwe will continue to own the resource in the ground, as well as the NI 43-101 report.
Mining houses should not be overly concerned about making such an upfront payment towards quantifying the resource. It makes the mining proposition much more attractive.
After all, the tsunami that is going through Zanu-PF will eliminate all comrades who subscribe to the 10 percent notion. Let that 10 percent go towards a nationally beneficial exploration programme.
This is not a groundbreaking suggestion. It is obvious to all accountants.
It is premised on the non-negotiable principle that the resource belongs to the people of Zimbabwe. You do not surrender your title deeds to an estate agent for repainting and managing your house.
So why should we surrender our mineral rights to mining houses?
Our professionals and accountants need to develop such solutions to our challenges based on an understanding of what is non-negotiable and sacrosanct.
Towards a New Partnership
I wish to propose that our business leadership re-engage and reconnect with Zanu-PF to work towards realising the Zim-Asset vision of an empowered society and a growing economy.
Business leaders must be informed by the mission of Zim-Asset which seeks to “To provide an enabling environment for sustainable economic empowerment and social transformation to the people of Zimbabwe”.
Political leaders must provide and facilitate for space and opportunities that enables business to thrive.
However, politicians cannot guess what business requires.
It is up to business to engage politicians in a manner that is nationalistic, patriotic and collective.
Engagement is a two-way process that requires that business acknowledges and accepts the requirements of society and politics in as much as business seeks to be understood.
Such engagement should not be similar to the type of engagements that are sought by speculative political entrepreneurs who only seek to derive personal benefit.
Consequently, business leaders are urged to actively follow proceedings of the 6th Zanu-PF National People’s Congress so that they can understand the political realities.
The issues of leadership are now largely resolved to such an extent that the bulk of Congress business will relate to the theme: “Accelerated Implementation of Zim-Asset”.
By this time next week, every business leader should be conceptualising how they interface with Zim-Asset in a manner that yields benefit to themselves whilst furthering the national developmental and transformational agenda.
Allow me to conclude by recounting a conversation with Mr Mutumwa Mawere on the subject of speculative political entrepreneurs.
Mr Mawere was aggrieved by my previous article which, he felt painted, him as a speculative political entrepreneur.
Mr Mawere made submissions argue that his acquisition of Shabanie Mashaba Mines was without the benefit of access to political influence.
Although, I have not sought to personally verify the facts submitted to me by Mr Mawere, I am duty bound to report his submissions that his business activities in Zimbabwe were not politically linked or aligned to any political person or political institution.
Zim-Asset.Mina lawesilomsebenzi.Iweneni tine basa.
Honourable Patrick Zhuwao is Chair of Zhuwao Institute, an economics, development and research think tank that focus on integrating socio-political dimensions into business and economic decision-making, particularly strategic planning. Zhuwao is the holder of a BSc (Honours) degree in Computer Systems Engineering and an MBA in Information Technology Management (City University, London). He also holds BSc (Honours) and MSc degrees in Economics (University of Zimbabwe), as well as a Master of Management (with distinction) degree in Public and Development Management (University of the Witwatersrand). Reach him at [email protected]. and [email protected]
