Zimbabwe needs stable political and economic environment - Zimbabwe Entrepreneurial Infrastructure Series

In emerging markets such as Zimbabwe the power of entrepreneurship to improve lives is at times limited and hindered due to high political risk arising out of fast moving and unpredictable political developments. Whilst theoretically there are attempts to separate politics from business, finance and investment in reality they are all related and cant be easily separated. Political risk is one of the most important factors affecting the creation of properly developed entrepreneurial infrastructure which Zimbabwe and Africa urgently need.

The country’s political leaders have a specific obligation to establish political and social stability as a first step towards establishing solid entrepreneurial infrastructure. This includes predictable application of rule of law and a stable regulatory environment.

Due to globalization it is critical for any emerging market to seek normal trade relations with other nations especially the developed nations who form the critical markets. Any restrictions such as embargoes or sanctions can negatively affect the entrepreneurial infrastructure and this places an additional burden on political leaders to always act in ways which do not attract embargoes or trade restrictions as this negatively affects the entrepreneurial development potential and hinders economic development.

According to Wikipedia Political risk is defined as “Broadly, political risk refers to the complications businesses and governments may face as a result of what are commonly referred to as political decisions—or “any political change that alters the expected outcome and value of a given economic action by changing the probability of achieving business objectives.” .

Political risk faced by firms can be defined as “the risk of a strategic, financial, or personnel loss for a firm because of such nonmarket factors as macroeconomic and social policies (fiscal, monetary, trade, investment, industrial, income, labour, and developmental), or events related to political instability (terrorism, riots, coups, civil war, and insurrection).” Portfolio investors may face similar financial losses. Moreover, governments may face complications in their ability to execute diplomatic, military or other initiatives as a result of political risk”

For investors, political risk can simply be defined as the risk of losing money due to changes that occur in a country’s government or regulatory environment. Acts of war, terrorism, and military coups are all extreme examples of political risk. Expropriation of assets by the government – or merely the threat – can also have a devastating effect on share prices.

Late last decade Venezuela’s leader Hugo Chavez abruptly announced plans to nationalize CANTV, the local phone company. The Company’s share price collapsed almost 50% before the details of Chavez’s plans or ideas emerged.

As in most markets Investors sell first and ask questions later on the exact details of the proposed plan. This situation is very similar to Zimbabwe’s indigenization 51% rule. The rules and regulations have been interpreted and mis-interpreted variously leading to an unease investment atmosphere which has dampened investor sentiment especially on the Zimbabwe Stock Exchange.

Whilst the Minister responsible for the Indigenization rules and regulations Minister Saviour Kasukuwere has issued various statements on the Act the regulations remain mis-understood and are viewed as a significant political threat on potential and current investment. This situation needs to be urgently addressed through highly organized investor road-shows and investment conferences whereby the Minister and other relenant senior officials clearly explain what these rules mean and how foreign investors can feel assured that their investments wont be seized.

These investment road-shows and conferences will also give the Minister and other senior Government officials an opportunity to clarify the current business disruptions and invasions which appear aimed at foreigners. What is the official Government policy on this. And what is Government doing to ensure that these acts and activities will not be taken as officially sanctioned.

In business and investment perceptions count for everything with each day that passes with business disruptions not officially denounced it sends a bad signal to investors and the current efforts to rebrand the country will be viewed as mere sloganeering and lip service.

High political risk makes doing business in a country very expensive and capital comes at a huge premium whilst assets in the country can only be sold at a discount due to the political-risk-premium which investors demand.

Political risk insurance is available against a broad spectrum of risks, including non-payment products for financial institutions, expropriation, war and political violence, cancellation of operating licences, exchange transfer problems, import and export embargoes .This adds to cost of doing business in the country and it discourages entrepreneurs and thus negatively affects the entrepreneurial infrastructure.

All information on this site is provided "as is" for informational purposes only, not intended for trading purposes or advice. Prior to execution of any security trade, you are advised to consult your authorized financial advisor to verify the accuracy of all information. Neither GMRI Capital nor any independent provider is liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein.

This article was prepared exclusively for 3MG MEDIA by GMRI Capital www.gmricapital.com
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More first generation entrepreneurs required - Zimbabwe Entrepreneurial Infrastructure Series

South Africa, Zimbabwe, Botswana and a several other African countries have come up with various affirmative action programs and broad based black economic empowerment programs (BEE) and indigenization .Given the historical economic imbalances these programs are relevant and imperative for Africa to attain a sustainable economic advancement necessary to uplift the standards of living on the continent.

However the concept of grabbing, seizing and invading businesses can not be mixed with noble broad based economic empowerment program. Africa needs to devise policies which can create entrepreneurial infrastructure which will encourage entrepreneurship and not business invasions, seizures or grabbing. This challenge requires more first generation entrepreneurs.

First generation entrepreneurs (FGE) are the ones who break the ground within their social grouping (could first from family, class, neighbourhood etc) and enter into business. They do not inherit the business from family (father ,mother or rich uncle etc).These are the individuals who have a dream and pursue it and do whatever it takes to set up their business from scratch. These are the people who are required for the economic empowerment to succeed. It cannot succeed by just taking established businesses and dishing it to those who are “deemed to qualify” under whatever criteria.

Setting up a business from scratch is not that easy, some people may even want you to fail for no apparent reason. And yet others when u succeeds may want to grab, seize or invade your business. Part of the entrepreneurial infrastructure means the provision of a secure legal environment where contractual obligations can be enforced and property rights respected. This will encourage other entrepreneurs.

First generation entrepreneurs provide next generation of growth companies which are different from established businesses. Most first generation entrepreneurs amplify the economic and social impact of important new ideas and discoveries which are converted from dreams into reality and new wealth.

African is in need of first generation entrepreneurs who are forced to come up with their own roadmaps to success as they create a path which no-one close to them has travelled. In the process they create a road map for the future generation to follow. This process becomes part of the entrepreneurial infrastructure which makes it easy for others within that community or family to enter into business.

Zimbabwe in particular and Africa in general is in desperate need for First generation entrepreneurs are ready starting from scratch and go on to translate their dreams into reality. This trait of starting things from scratch can be learnt and be taught and can rub off to become cultural and become a standard. This is what comes naturally from having well developed entrepreneurial infrastructure. From an early age young individuals are groomed to become entrepreneurs and learn from others around them who are part of the entrepreneurial infrastructure. This does not happen by accident but rather through careful and deliberate policy formulation and implementation which aims at creating a generation of globally competitive entrepreneurs who appreciate to start a business from scratch and see it become a world class brand.


Successful entrepreneurs need courage and have to have the mentality to do something that's never been done before and have fun whilst doing it. The mere fact of invading or seizing someone’s business indicates lack of entrepreneurial infrastructure and entrepreneurial spirit. Whilst a business can be legally take over let it be the exception rather than the national motto which specialize in taking over businesses. The national motto should be to create businesses from scratch with the state creating the conducive environment as part of the entrepreneurial infrastructure

A properly developed entrepreneurial infrastructure provides business advice and mentorship, market intelligence, entrepreneurship education, seed capital and access to critical talent, customer and partnership networks and joint venture opportunities which help aspiring entrepreneurs realise their dreams.

Several studies indicate that people who grew up within and around families who owned a business have a higher chance to own a business themselves. This is true in Zimbabwe and Africa generally. A majority of entrepreneurs grew up with and around business minded people and naturally certain skills and capital come natural to them. This is part of the entrepreneurial infrastructure which is required but it all starts with the first generation entrepreneur who creates a path that becomes a roadmap for future generations.

Disclaimer
All information on this site is provided "as is" for informational purposes only, not intended for trading purposes or advice. Prior to execution of any security trade, you are advised to consult your authorized financial advisor to verify the accuracy of all information. Neither GMRI Capital nor any independent provider is liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein.

This article was prepared exclusively for 3MG MEDIA by GMRI Capital www.gmricapital.com
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Women entrepreneurs must be supported Zimbabwe Entrepreneurial Infrastructure Series

Africa’s economic independence aspirations require more women participants to be involved in business ownership and entrepreneurship. Normally innovation drives entrepreneurship which starts first with the vision then the mission which leads to the creation of a business. There is no natural law which excludes women in business but rather social construction and family values have served to exclude women from benefiting from entrepreneurial infrastructure to establish their own businesses.

Globally in general and in Africa particularly historically, entrepreneurship has been a male-dominated pursuit which has been supported by centuries of social construction values which have sought to exclude women from meaningful economic activities. Zimbabwe should take a lead in the current economic empowerment exercise and ensure women are not relegated to spectators but significant participants.

In a family set up entrepreneurial talent, spirit and skills may be possessed by a woman who may be a sister, mother or daughter. This calls for the male relatives who may be the brother, husband, father to be prepared to support the female relative pursue her entrepreneurial dreams. The support to the female relatives is critical for the woman entrepreneur who may face many other hurdles in the business world including discrimination.

The keys to growing a family business support and maintaining healthy family relationships are trust, strong family values and open communications. In Zimbabwe due to our cultural upbringing man normally take the lead in most things but in the entrepreneurial endeavour in the family set up it may be best that the man play the supporting role whilst the woman is the “main actor”.

A lacking important part of the entrepreneurial infrastructure is to empower economically marginalised women to empower themselves by offering practical resources which make it possible for women to enter business and succeed. This requires an adjustment on how woman entrepreneurs and business woman are viewed.

The family system led by the male spouse has to play a positive role in increasing business confidence, facilitating equal access to economic and productive resources for women, and to facilitate poverty eradication, utilising gender empowerment principles.


Before an individual takes the plunge to own a business based on what could be one’s passion, hobby and possibly business skills it takes a lot of courage, determination and the acceptance of continuous hard work. In addition it requires solid support of the whole family for the business to succeed. This challenge is even higher for a woman since in the African society woman have historically played a more reserved role in the family’s economic affairs.

As part of the Zimbabwe and Africa entrepreneurial infrastructure there is need for policy shift which helps set up organizations that provide business training and networking opportunities for women of diverse occupations and backgrounds. This is in recognition that women are capable entrepreneurs if given the support and resources needed to start a business. The general reduced numbers of women in business is a clear disadvantage for Africa to compete at a global scale since almost half of the population is arguably excluded from accessing the limited entrepreneurial infrastructure.

At times role confusion in family and business can cause communication problems that can hurt the business and wreck family relationships. This is normally a result of poor communication at the initial stages when one partner decided to enter into business with the other not being so supportive or “understanding”. One possible way to address this is for families to focus on how everyone can benefit if the business succeeds. Then support whoever has the passion, skills and spirit for entrepreneurship even if that person happens to be a woman.


Disclaimer
All information on this site is provided "as is" for informational purposes only, not intended for trading purposes or advice. Prior to execution of any security trade, you are advised to consult your authorized financial advisor to verify the accuracy of all information. Neither GMRI Capital nor any independent provider is liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein.

This article was prepared exclusively for 3MG MEDIA by GMRI Capital a Division of the ENG Capital Group.
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The funding Challenge - Zimbabwe Entrepreneurial Infrastructure Series

Africans and Zimbabweans have been involved in business transactions for centuries somehow they have been overtaken by the rest of the world in terms of building successful businesses. This trend can be reversed through careful steps aimed at promoting and supporting entrepreneurship. When starting a business family support is critical for success. If married then spousal support is critical for the venture to succeed. This support is critical because those immediately close to the entrepreneur have the burden of being forced to support someone’s “dream”.

Any entrepreneurial adventure will require some form of capital. In Africa generally and Zimbabwe in particular capital is really hard to come by even if one has a solid business proposition. The starting point for the entrepreneur should be to start as early as possible to solicit support of those around you. Simply start sharing your general ideas about your business “dream” with those around you.

Some will be encouraging but most will discourage you but don’t be discouraged instead try to pick their brains and understand their source of fears which will normally help you properly plan for the rocky road ahead.

If you listen carefully to the discouraging voices within that are some of the answers that will see your dream come true.

Family support is critical as the entreprenuer is normally faced with limited resources and has to tap into family or relatives resources to see the vision develop into a viable business. When entrepreneurs start their venture normally they resort to “ bootstrapping finance” which is entirely based on family or close friends support.

According to investopedia “A situation in which an entrepreneur starts a company with little capital. An individual is said to be bootstrapping when he or she attempts to found and build a company from personal finances or from the operating revenues of the new company.”

Entrepreneurs have long relied on family for help in launching new businesses, often after exhausting other resources such as personal overdrafts and personal savings, and before seeking out for bank loans or other institutional funding.

Compared to using bank loans or Angel investor funds, bootstrapping can be beneficial because the entrepreneur is able to maintain control over all decisions which allows them to shape the company. The risk however, this form of financing may place increased unnecessary financial risk on the entrepreneur. Additionally bootstrapping may not provide enough capital for the new venture to become successful at a reasonable pace especially in Zimbabwe with its fast changing operating environment.

Obviously bootstrapping involves increased risk for the founders, the absence of any other shareholder gives the founders more freedom to develop the company in the best direction they see fit with quick decision turn around. Most successful companies were founded this way with the entrepreneur starting off from humble beginnings until the business concept could attract additional capital which normally comes with additional conditions and dilution of control.

It must be noted bringing in outsiders can be beneficial. Outsiders can provide financial oversight, accountability for carrying out tasks and meeting important targets and milestones, and many can even bring highly valuable business contacts and experience to the table which will enable the business to develop much faster.

Once the entrepreneur starts using other people’s money there is greater need for accountability and responsibility. This includes having reasonable forecasts and expectations which should be clearly and accurately communicated to those who would have given you support or whom the entrepreneur is seeking funding from.

It is always a good idea to make a point of clearly explaining to friends and relatives that you couldn't guarantee their investments would pay off and that there is chances your business may fail even though you feel the venture is viable . The entrepreneur has to educate people on the risk profile of the business. Do not didn't accept funding from people who didn't understand that.

Disclaimer
All information on this site is provided "as is" for informational purposes only, not intended for trading purposes or advice. Prior to execution of any security trade, you are advised to consult your authorized financial advisor to verify the accuracy of all information. Neither GMRI Capital nor any independent provider is liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein.

This article was prepared exclusively for 3MG MEDIA by GMRI Capital a Division of the ENG Capital Group.
Contact
http://www.facebook.com/engcapital
http://twitter.com/engcapital
www.engcapital.ca