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THE rotting paint clinging to equally decaying infrastructure and relatively unkempt acres of land around the Cold Storage Commission’s complex in Harare’s Willowvale area points to an economy in a rut.
But the buzz of activity belies the poor appearance of the industrial zone.
From tobacco farmers and the attendant vendors who feed off them selling trinkets, food, cellphones and scotch carts, to various SMEs that have made the area their home, a new economy is slowly taking shape.
Stand number 174 on Gleneagles Road stands out.
It hosts one of the most remarkable feel-good stories of Zimbabwe’s small to medium enterprises revolution — Moushtec Steel and Fireplaces.
Moushtec — which produces a range of products out of mild steel such as fireplaces, sliding gates and incinerators — has asserted itself as a shining light of an emerging economy to the point where it was one of the businesses officials from the Office of the President and Cabinet in October last year included it in its tour of companies.
The delegation included Government ministers, ambassadors posted to Zimbabwe, and representatives of regional and international financiers such as the African Development Bank and the African Export and Import Bank.
Needless to say, officials were impressed by the level of professionalism at the 16-year-old company.
When Moushtec opened its doors in 2000, its main focus was buying and selling steel. After realising that the business would not grow, founder and MD Mr Simbarashe Zengeya decided to add value to the steel through manufacturing products that could bring meaningful margins.
The move paid dividends.
Mr Zengeya says, “We ventured into manufacturing in 2004, starting with fireplaces and later moved to sliding gates, garage doors; all in different sizes and shapes. From there we are growing from strength to strength.”
The company now has 25 permanent workers, while an additional 50 are hired on a contract basis when demand rises.
At a time when big companies are under pressure from slowing economic growth, Moushtec has been able to meet its staff obligations.
It is, therefore, unsurprising that Mr Zengeya has won the manager of the year in the SMEs category, while the business was considered to be the most innovative company of the year.
It also won accolades for best management practice from BuyZimbabwe and the Institute of Management.
Compliance
The bane of most local SMEs is playing hide-and-seek with the law in order to dodge statutory obligations, which, in some instances, are considered a disincentive for compliance as they are very high.
Local authorities’ regulations are also blamed for scaring SMEs from working within the law.
For businesses such as Moushtec that comply, the challenge is with competitors who do not pay taxes or other statutory obligation, thus allowing them to undercut prices.
Some of them even market their goods in front of Moushtec’s premises.
Notwithstanding these challenges, most of which are beyond its control, the business has continued to soldier on.
Not only is Moushtec compliant with regulatory authorities, it has also insured its operations.
There are countless small businesses and entrepreneurs that go bust after suffering unforeseen mishaps such as fire or theft.
Cash shortages
Like other businesses, Moushtec has recorded marginal declines in trade volumes as a result of an illiquid market.
Perhaps the most difficult challenge that the enterprise has had to contend with is rent-seeking behaviour from suppliers, some of whom are beginning to price their products differently depending on whether there are purchased on cash or through electronic transfers.
Such pricing distortions are slowly eating into Moushtec’s margins.
Also, some of the businesses that Moushtec deals with do not have bank accounts, which makes it difficult to transact.
Mr Zengeya hopes increased use of plastic money will help to improve the situation.
“I think it is important for all companies to bank their money so that the Reserve Bank of Zimbabwe and Government are able to tell how much money is in circulation.
“We do all our transactions through the bank but the problem is that our suppliers are now charging different prices for cash and plastic money payments. If one is paying through plastic money, the prices are higher and lower when using cash,” he says.
Support
Despite having an ideal model for a successful business, the operating environment has not been able to afford Moushtec the helping hand it needs to grow further.
Repeated applications for land on which to establish a permanent base have largely been ignored. Last year, Government promised to look into the matter but nothing has materialised yet.
“In terms of real assistance, I think there is a challenge. There has not been any assistance to talk of. For instance, I have tried several times to engage Harare City Council so that we get land for us to operate from but there has been no success.
“I have been promised by several Government ministers and other officials that we would get land so that we can expand the business but nothing has come through … I wish Government could give us somewhere to operate from because it does not make business sense to operate this nature of business from a rented place.
“Now we have people selling products – some of which are similar to those we produce – in front of our workshop but we have no power to remove them since we don’t own the place.
“These traders don’t contribute anything to the fiscus, they don’t pay rates to council and they also don’t employ anyone,” complains Mr Zengeya.
The space he uses is now cramped.
In addition, if the owner of the current premises decides to remove him, he has nowhere to take his business.
Range
Moushtec’s product range has expanded from fireplaces, sliding gates, security screens, garage doors, incinerators, tank stands and braai stands to palisade fencing, gate automation, fireplace decorations, scotch carts and meta steel fabrication.
All the products are from mild steel sourced from local suppliers.
Since exhibiting at the Zimbabwe International Trade Fair, the company has been getting more enquiries for its incinerators especially from high schools, clinics and hospitals.
The pressed sliding gate, which has come with a new design, has also been on demand.
So, too, has been the double-sided fireplace that can serve two rooms at the same time.
Though Mr Zengeya has established an innovative manufacturing company, he is a marketer by profession and has broadened his knowledge through studying Financial Intelligence, Corporate Governance for Entrepreneurs and Business Management.
“Passion pushed me into this trade. I am a marketer by profession but there came a time that I felt I should just start this business . . . As we employ, we look at the qualifications of employees but obviously we teach them what we want.
“There are people who hold qualifications but cannot do the job and I wonder how they would have gotten them because they can’t do the job,” added Mr Zengeya.
Cutting corners
SMEs are largely considered to be businesses that cut corners and avoid formal trading channels.
As a result, many do not grow as they fail to access finance and the expertise that comes with partnering institutions such as banks.
“If you don’t do your job professionally, you may survive but will not grow. There is need for SMEs to possess the necessary qualifications so that they run their businesses profitably.
“For instance, you need to know how to balance your books because you cannot operate a successful business without knowing how much you are putting in the business and how much profit you’re making.
“I also think that people should do things that they have a passion for what they do so that they create employment for others. It makes me happy to see employed people taking care of their families from my company,” beams Mr Zengeya.
Online Reporter