eBusiness Weekly
Mamvura’s Market Minute
The RBZ governor is on record for saying that manufacturers are “cry babies” when it comes to forex. But what Dr Mangudya was probably trying to say is that for the forex demanded by manufacturers, the forex returned in the form of a manufactured good does not justify the outlay of the allocation in the first place.
Of course, “allocations” have only become an issue since 2015, and Mamvura’s not going to speculate as to the reasons why the Nostro accounts ended up being emptied, suffice to say:
(1) There are better ways to mobilise forex quicker and
(2) Powerspeed is a perfect example of there being a life after manufacturing.
This is a company that in the post-dollarisation period has not gone to its shareholders to ask for more money and has continuously pushed up revenue (up 30 percent in F17 and not entirely “swipe” price driven), cut its margins and turned in reasonable profit.
What did Powerspeed do? Realising all its manufacturing and electro-service units were under threat post-2000, it decided to make a move into a niche retail market — hardware — where unlike single outlet operators in the cities, it could provide a nationwide footprint. In that, you get to move volume and when you sell lots of goods, you can play with the price. Economics 101.
Of course retail in Zimbabwe is as much of a forex consumer as manufacturing. At least 70 percent of the value (and the high margin stuff) is imported. But ultimately what has Powerspeed done?
Retrained its old work force and retained its manufacturing skills base (so it does not lose this trick for the great turnaround one day), expanded its retail footprint (now 10 000m²), and provide people with goods they want. That in turn creates employment, taxes and general economy.
And one day Massmart or some other South African group is going to come along and buy them out as it will be easier than setting up shop themselves.
