adminBUSINESS tycoons dont usually own 100 percent of any business.
Even Mr Strive Masiyiwa, arguably Zimbabwe’s richest person, does not own 100 percent of Econet. He has investing partners who made Econet what it is today.
It is not always the piece of the pie that matters but the size of the pie.
It takes a great business mind to attract wealth. Being business minded means running a great business and it requires taking risks, lots of hard work and the right set of tools.
You can own a great asset, but simply because you lack the adequate business acumen, you can never create real wealth.
Looting and accepting quick cash is not business. By accepting quick cash, you may only make a little of what you were supposed to earn if you had created wealth.
Mining, for example, is a very risky business that requires an intensive capital outlay to start.
Regardless of what experts might say, it can be difficult to really quantify the amount and quality of minerals underground.
In short, the investor will be taking a big risk funding something he is unsure of.
Many investors, particularly in the mining sector, tell of harrowing stories and sad experiences that they have had at the hands of Zimbabwean partners.
There is the case of an investor who committed to injecting between US$30 million and US$50 million for a greenfield coal project. He agreed to take local partners to comply with the Indigenisation and Empowerment Act.
The deal collapsed when the local partners, who held the concession for the project, demanded an upfront cash payment of US$2 million before mining had even begun.
It is a classic case of myopic business partners.
There is need to strike a balance between the interests of both the investor and the asset holder.
It’s key to consider that the asset has to sweat in order to create value, and the risks that the investor will be taking by investing huge sums in a greenfield project need to be aknowledged.
Insisting on payment upfront might be a deal breaker.
When a potential deal collapses, the asset will continue to be idle and the benefits of the project are inevitably lost.
Why would someone expect a dividend before any profits are made? Remember, there are benefits that naturally accrue from such ventures if the asset holder is willing to bide his or her time, especially in circumstances where they own 51 percent of the business.
There will come a time when the business will be profitable. Many investments are long-term ventures, so, it’s logical to wait for the business to mature before meaningful dividends are realised.
Some investors will agree to pay something upfront, or a kickback as it were, but this has repercussions to the business as well as the investor might act in bad faith in future, electing to loot resources rather than growing the business.
There is no doubt that Zimbabwe has lost a significant amount of money from looting by some investors.
The pursuit for a quick buck can be catastrophic.
What seems to be a good deal may actually be a total rip-off. This is why we need to be create wealth and be business minded.
It really does not pay to be greedy; it is foolish to accept kickbacks and it also destroys a key fabric of the nation.
We can have vast resources as a country but if we do not have astute and responsible businesspeople, then our efforts to build the economy will come to nought.
Jobs need to be created and the country needs money.
Talking about corruption alone will not solve our problems, we need to deal with it decisively.
President Mugabe and his Government can only do so much to empower locals. We need to play our part through putting resources to good use.
Let’s prove that as a nation we are capable of creating wealth.
We also need to demonstrate the capacity to deliver.
Many of the world’s richest entrepreneurs have shareholdings in many companies, and their holdings are not necessarily controlling stakes.
Bill Gates, for example, doesn’t own 100 percent of Microsoft.
Having one percent of something is always better than having 100 percent of nothing.
Taurai Changwa is an articled accountant and ACCA finalist. He is managing director of SAFIC Consultancy. Changwa writes in his personal capacity and can be contacted at [email protected], Facebook page SAFIC Consultancy, and WhatsApp number 0772374784
Online Reporter