dyton mupawaenda
Dr Michael Musanzikwa
THE National Competitiveness Commission recently held a summit in Bulawayo.
The aim was to discuss constraints weighing down on Zimbabwe’s business community, preventing it from operating effectively and failing to compete regionally and globally.
Challenges facing business were identified.
These include multiple taxes, exchange rate disparities, restrictive regulations, the growing informal sector and high cost of and limited power supply.
When all these challenges are factored, they become part of the employed capital of the business, which impacts negatively on the ability of the organisation to provide working capital for meeting procurement obligations for services and materials needed for production.
However, the Government promised to streamline taxes and reduce the cost of regulatory compliance requirements within the next six months in order to reduce the cost of doing business.
The cost of doing business has been the elephant in the room, which needed the intervention of the Government to deliberate with all the relevant stakeholders.
Based on the commitment of the Government to fulfil its promise, it is critical for boards and captains of industry to recognise procurement as one of the critical pillars in decision-making for the success of an organisation.
In this case, from a procurement perspective, the Government is viewed as the provider of political and economic stability through conducive economic policies that allow a level playing field for all bona fide businesses.
Conversely, the manufacturing sector and business community procure permits of certification and legality through regulatory licensing institutions for various operational processes.
Therefore, the total regulatory requirements for a business to operate legally become a package, which will be part of the cost of doing business borne through procurement.
So, the convening of the competitiveness summit is greatly appreciated as it brought together the supplier (Government) and the procurer of services (manufacturing sector and business community) to the negotiating table to discuss challenges affecting formal businesses to operate competitively.
This means the summit was a platform to discuss critical issues from a strategic point of view, with the procurement function as a conduit to ensure the availability of the business space requirements and to enable the organisation to operate at the most minimum cost.
What is important is to appreciate that procurement has developed from being tactical to a strategic business activity, which synchronises the demand for resources with supply, and it recognises the Government as the major supplier of the economic enablers for the manufacturing business community at large.
Furthermore, it is critical for the business leaders who attended the competitiveness summit to cultivate and cement the relationship between the Government, as the provider or supplier of the conducive business environmental requirements, and the manufacturing sector, as the procurer of regulatory requirements.
The business sector, through representative bodies like the Confederation of Zimbabwe Industries and Retailers Association of Zimbabwe, must consider themselves and the Government partners in business.
Both parties must appreciate that they are also part of the production processes in achieving their strategic objectives.
For example, for the Government to successfully attain Vision 2030, of making Zimbabwe an upper middle-income economy, there is need to provide a conducive economic environment, one with attractive and flexible regulatory policies.
In return, the business sector will procure this enabling service as the first critical raw material in exploiting other factors of production for the national output of the economy.
When the Government creates a favourable economic environment, it means when businesses decide to invest in any sector, the role of procurement comes into play as one strategic aspect of decision-making, giving direction to the success of the organisation in terms of continuous sources of supply of raw materials or a continuous enabling regulatory business environment.
Based on a stable business atmosphere, the procurement function provides this information to senior management and the board:
- Global political and economic stability for sources of supply of materials
- Supply market intelligence for continuous availability of raw materials
- International pricing for favourable exchange rates for the organisation
- Quality aspects of the materials
- Recognition of the environmental and sustainability issues
- Recognition of the international labour laws
After carrying out the global and domestic supply market analysis, it is critical for the organisation to determine the type of relationship they are to engage in with the supplier.
As previously mentioned, the supplier and the buying organisation are partners in business, and it is important to maintain the relationship as transactional or partnership based on the benefit to be derived.
For instance, when the review of the regulatory policies is completed, it will be important for captains of industry to take advantage of their procurement functions in determining areas of value chains where they can partner with the sources of supply.
This is because, in this millennium, business competition is no longer between organisations, but between one supply chain against another in the same sector.
The collaboration and development of a relationship between the supplier and the buying organisation will yield a lot of benefits, which include continuous supply of resources, lower costs, quality costs and competitiveness.
The holding of the competitiveness summit should be applauded as it was the genesis of adopting best practices of enhancing business prosperity in Zimbabwe by providing the opportunity to recognise procurement as the critical link between the supplier and the procuring organisation. In this case, the Government is the critical provider of the economic policies, which are expected to be sound and clear, to allow a level playing field for the success and continuity of business.
Therefore, the relationship between the Government and business must be the bedrock of sustainability for the organisation, with procurement facilitating its role as a critical conduit between the supplier of policy services and the business sector procuring the services.
The competitiveness summit was an eye-opener for both parties to view the procurement function as a strategic key when investing shareholder capital by procuring the needed enabling services first.
If the package of the enabling services of doing business is too restrictive, then it will be a red flag that the future of the business will be very pessimistic.
However, convening of the competitiveness summit between the Government and the manufacturing sector should be viewed as very progressive, with procurement linking the two to maintain a good relationship for the benefit of the economy.
Dr Michael Musanzikwa is the chief director (procurement and disposal of public assets) in the Office of the President and Cabinet.
Online Reporter