Sean Nota
After more than two decades of stagnation, a new breed of entrepreneurs is being born in Zimbabwe. Under the radar many young entrepreneurs are attracting the attention of foreign investment funds. The reason: For more than 20 years Zimbabwe has been ignored as a place where anything good can happen. That is changing fast. Just recently a generally unknown startup in the Fintech space raised some money giving it a valuation of a cool USD20,000,000 from a UK based investment fund.
The Zimbabwean Startup Ecosystem has started an interesting episode that is full opportunities that if appropriately managed will result in growth that will permanently improve our economy. One of those opportunities is access to global markets and attracting direct foreign investment. The best guideline in achieving both is Porter’s Diamond Model. It gives the parameters to be considered for companies to be effective in the global economy and is frequently used by international financial institutions and investors.
On 11 January 2019 I was in the room at Celebration Church when the Finance Minister Mthuli Ncube was addressing a room full of entrepreneurs during the Global Shapers program “Road to Davos”. This was the ideal space to understand the mind of the Zimbabwean entrepreneurs. In response to a Venture Capitalism question, the Hon. Minister gave a breakdown of what need to improve the environment for the entrepreneurs these were:
1) Skill Enhancement
2) Mentorship
3) Incubation
4) Angel Financing and
5) Venture Capitalism.
This is in line with the role that Porter suggests in the Diamond Model with reference to Factors. When considering factors this includes the capacity of the economy to generate capital, the availability of skilled human resources and general resources that the nation may have like Gold and Diamonds in the case of Zimbabwe. However interestingly he says, “Created Factors are more important compared to natural”.
The Zimbabwe business community needs to appreciate the role that information dictates in shaping the success of the business in order to fully take advantage of the opportunities present. We have to be able to channel the high literacy rate, our minerals, and our work ethic and enhance them with appropriate skill, relevant information with in appropriate controlled environment.
The role incubators (Hubs) play is key in achieving this. It is encouraging to see that in our tertiary institutions incubation hubs are being introduced like the Midlands State University HUB. More importantly we also have other private incubator like B2C, Impact Hub, Tech Village and Tech Hub that are offering spaces for innovation and networking, giving leverage to entrepreneurs.
These will contribute is giving the fundamental guidelines needed by innovators, creative and practical. Many entrepreneurs lack mentorship and funding. More importantly entrepreneurs are not getting enough exposure to the tools and training they need to move their ideas into credible and successful ventures.
Michael Porter recommends that within the domestic market they should be rivalry to create a healthy competitive environment to encourage innovation, creativity, and technological solutions for make the companies competitive at a global level. I would like to combine this with one of his factors in the Diamond Model which is supportive industry. For Zimbabwe specifically a fusion of the two is most likely to produce more favorable results. Yet this is still lacking.
Zimbabwe because of years of economic challenges developed an adaption business tactic, which include what I would refer to as the the copy and paste strategy. This simple involves identifying a perceived successful business to the neighbor and set up an identical operation next to the former neighbor now competitor. We have seen the telephone calls business boom, next was the internet cafes, followed by the street selling of second imported clothes (mabhero). This level of competition is limited and does not create the necessary aggregated capital or economies of scale necessary for the international participation.
Entrepreneurs need to check the pulse of the economy and identify areas where resources can be deployed to obtain the maximum gain. The economy remains a primary based economy to a large extent and sadly continues to lose value by exporting unprocessed or semi-processed products such as:
– Cotton
– Tobacco
– Platinum
– Gold
– Nickel
– Coal
– Chrome
The list is quite long and has remained so for many years. Entrepreneurs must now focus on value addition and innovation to take advantage of the country’s competitive advantage in the extractive sector. Government too must direct entrepreneurs to these areas through incentives and supportive policies.
I recommend the creation of an ecosystem of interdependency so that companies become big enough to support employment and meet adequately the demand ultimately encouraging competition that will add better customer experience which will be critical at a global level. This can be supported by a supportive environment, where the stakeholders in the economy ensure that:
– There is a more stable economic environment where conditions are suited to starting and running businesses.
– Reduce the barriers to idea sharing. Many a time startups and corporates fail to take advantage of the exchange of ideas because of fear of having ideas stolen.
– Licensing and compliance costs. There is need to review these and make them less demanding on young and upcoming businesses.
