The Sunday Mail
LAST week the IMF indicated in its outlook for Sub-Saharan Africa that economic output for the region – estimated at 1,4 percent this year – is the lowest in 20 years. Resource-dependent economies like Zimbabwe are suffering most. However, Fluid and Power Technologies, a Zimbabwean engineering solutions provider, are confident that nascent recovery in commodity prices will improve their performance in the near-term. The company is also confident that the Moveable Property (Security Interest) Bill that will be debated in Parliament soon will make it easier for SMEs to get loans. The Sunday Mail Business spoke to FPT managing director Mr Shephard Kembo about this and more.
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Q: Zimbabwe’s economy is facing significant headwinds with mineral prices declining on global markets. How are fledgling businesses such as Fluid and Power Technologies, which have a direct link to the mining sector, surviving?
A: Generally, if the mining sector is doing well, more than 50 percent of our products and services would have been targeting and supplying the industry. At the moment, we are still providing significant services to the few operating mines that are however not operating at maximum production capacity as a result of declining mineral prices on the global market. I would say we have not benefited much from this particular sector, which, generally, should be bringing in significant foreign currency if it was operating at its peak.
One would find that not many of these mines have embarked on any capital-intensive projects when it comes to retooling and buying of new equipment, let alone have the existing equipment serviced and or refurbished. Having said that, we still have been able to get to work with the few operating mines.
I must hasten to say that Zimbabwe is endowed with vast mineral resources and, as a company, we have no doubt that this particular sector – whose historical contribution to the economy in general is beyond question – will emerge from the current temporary challenges to take its rightful pole position in terms of economic growth and contribution.
When this happens, which we are very positive as a company will happen very soon, Fluid and Power Technologies will be ready to play the supportive role that we have played religiously in the past. The artisanal mines and the informal mining sector, which in the past had not been that organised, seem to also finally have been able to organise themselves into a formidable force.
And the impact of their reorganisation has helped our company; they have started seeking professional and expert services and products from our company as well. Their leadership has managed to negotiate some of the best deals with suppliers. Our company is ever ready to work with the leadership of the small miners association.
Q: But what kind of products do you supply and to which sectors?
A: We supply conveyor belts, ventilation systems, ducting fans, cured and uncured rubber that is used for rubber lining, adhesives that are used on rubber lining, hydraulic hoses and fittings, hydraulic rams and hydraulic valves and pumps, pneumatic hoses and fittings, pneumatic valves and pneumatic cylinders, instrumentation, heat-resistant hoses, coolant hoses, high pressure power cleaning machines, brake pipes, and steering pipes.
We provide products and services to the mining, agriculture, manufacturing, automotive, and energy sectors. Our services have also found favour with borehole drilling companies, printing companies, the construction industry and local authorities. We welcome Government policies that promote local suppliers, and the Buy Zimbabwe campaign, including Statutory Instrument 64 of 2016.
We believe that as local industry benefits from Government’s intervention in the medium to long-term, production levels will increase. Ultimately this will benefit suppliers like ourselves. But we do feel more needs to be done on local procurement. Local companies still need to be encouraged to buy and service their equipment locally. Unfortunately, there are companies that prefer buying engineering equipment and or their components from outside Zimbabwe.
There are cases where the equipment or the expertise is bought and brought from outside or the equipment is brought in to be commissioned by local engineering experts. We would prefer a situation where local engineering companies would be contracted to bring in this sort of equipment and the procurement.
When local industries do procure from outside the country, they make payment prior to the equipment or components shipped to the country, but when the equipment is locally available, these companies would only prefer paying after usually 30 days or more, which tends to strain local suppliers.
Government needs to not only effect such legislation but make sure that it is enforced and adhered to.
Q: What do you believe are the advantages of big companies contracting emerging businesses?
A: Big companies would be helping emerging companies to realise their dream of playing an important role of creating employment, help grow small business to become medium companies and one day be corporates that contribute to the economy as a whole.
Emerging businesses constitute a bigger part of the informal sector. Most of these emerging companies have done commendable, quality jobs exhibiting excellent workmanship on their products much to the satisfaction of local industry. Our company has been privileged to be contracted and entrusted with engineering work by some of the big corporates, particularly mining houses and manufacturing companies, and we have not betrayed the faith that these companies bestowed upon us.
Q: Do you have the capacity to meet demand and also supply products at competitive prices?
A: We have the optimum human capital and the engineering expertise that is required to perform all our contracted jobs and projects. Our executive management team and workshop technical operatives have more than 30 year’s cumulative experience.
We regularly send our staff to technical trainings including refresher courses supervised by the best of our technical partners in and outside the country to make sure that they always adapt to the ever dynamic changes associated with our industry.
Our company always strives to make sure that all our customers’ stock requirements are fully stocked to avoid unnecessary production interruptions or downtime.
Q: Do you believe there is scope for Government to make policies that encourage big companies to give preference to local suppliers – provided of course that their products are of the expected quality and are competitively priced?
A: Whilst as an entrepreneur one would not advocate for an entirely regulated business environment, I believe Government needs to formulate, implement and enforce policies that do encourage big companies giving preference to local suppliers. It encourages and promotes local money circulation (liquidity); it promotes local company growth and expansion. It also helps grow a new corporate citizenry, not forgetting creating the much- needed employment in the country.
Some companies just procure from outside the country for the sake of doing that, while others have deliberately set certain limited thresholds for local purchases. But while there are prepared to export cash outside the country in advance to make purchases, they take between one to three months to pay local suppliers.
There are companies that have even resorted to setting up foreign buying houses to facilitate foreign purchases. However, the quality and workmanship of local suppliers should always be looked at.
Compromising quality should not be accepted at all costs. Technical colleges and research centres from institutions of higher learning should also be innovative and play a key role in helping local production of quality and world standard engineering equipment and components.
Q: What are some of the challenges faced by emerging businesses?
A: There are number of challenges that emerging local businesses face, chief among them is financing. Financial institutions have not been able to assist emerging businesses. Most of the time either banks do lack the capacity or are reluctant to help emerging businesses.
And in most instances the emerging businesses do not have the required form of collateral that is required by banks. It is heartening that the Moveable Property (Security Interest) Bill, which seeks to help emerging business access credit by making moveable property qualify as collateral, will be debated before Parliament soon.
A lot of small and medium-sized firms have projects and orders that have been put on ice due to financing challenges. Banks might justifiably feel the need to be prudent before providing financial assistance, and this often results in most of financial institutions taking long to approve loans whose order financing requirement might have a turnaround period of less than a week.
A good example is an engineering company that needs to supply a component to a production plant that has stopped running because of a broken component. If it takes time to access such funding, it means the production plant is not running. The other challenge is to do with attraction of experienced human capital.
Emerging businesses may face challenges with attracting the right calibre of experienced and qualified personnel as most would like to work for established bigger companies offering better remuneration and or job security.
Also, some emerging businesses have faced challenges with clients delaying to pay for goods supplied, which, in turn, affects capacity to restock and or late delayed wages and salaries. Such developments often demotivate staff. Liquidity, of late, has been another challenge. In today’s business environment, a business has to have a lean staff complement, and as many people spend their time in bank queues production suffers some times.
Limited access to capital can also affect the ability to put up solid business systems.
Q: What are some of your plans going forward.
A: Obviously we would like to be a reputable engineering solutions service provider, a company that continues to strive to give the best. We would like to make a significant contribution towards the growth of our economy, especially as farmers prepare for the impending farming season, since we provide the solution to the service and repair of farming equipment.
We are also going spread our tentacles more to the mining, manufacturing and automotive industries. We have entered into strategic business partnership and alliances with international partners in order to continuously improve our standards and quality of work.
Currently, we are in the process of negotiating with renowned brands to bring the expertise to Zimbabwe for the benefit of our company and customers.
Fluid and Power Technologies is glad to have been of valuable service to all the sectors it has been involved with to make a difference. We strongly believe that despite some of the challenges that emerging businesses have faced and continue facing, we will continue providing products and services.
