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Diaspora Matters

Of Climate Change, Cyclone Idai and Entrepreneurship

idai

You have all seen the effects and impact of the Cyclone Idai….devastating impact to Chimanimani and Chipinge. It’s unfortunate that we have lost a lot of lives and livelihoods have been destroyed.

The cyclone wreaked havoc in southern parts of Malawi and the Mozambican side last week and this should have been a heads up of what was coming our way. Unfortunately we were caught unawares and resulted in some avoidable loss of lives.

Perhaps the poor response can be attributed to the fact that cyclones are a rare phenomenon in this part of the equator. The last devastating cyclone was Cyclone Eline in the year 2000. Cyclone Japhet was a follow up but the impact was not as severe as what we experienced with Cyclone Idai.

For risk management professionals, are you considering the impact of climatic change in your strategies? Do your risk registers include climatic change and natural disasters? When carrying out risk assessments, are you giving enough weighting to climatic change impact?

Are audit reports including this important area or the focus is strictly on financial transactions? Just check the social and economic damage done to:

  1. Hundreds of human lives lost in Malawi, Mozambique and Zimbabwe
  2. Thousands of livestock lost
  3. Farm produce lost
  4. Roads, dams, telecommunication and electricity infrastructure
  5. Irrigation systems damaged
  6. Bridges, homes, shops, clinics, prisons and  hospitals damaged
  7. Cost to education, school infrastructure destroyed, access roads destroyed

We are talking of damage running into hundreds of millions of dollars. Does this make sense why the issue of climatic change is finding itself in financial subjects? The drought experienced during the year is already another huge cost and a cyclone was the last thing we were anticipating! Add to this an economy which is struggling for recovery.

How many organisations had fully covered climatic change in their strategies? How many banks were monitoring the development of the cyclone over the Indian Ocean? How many had assessed the potential impact of climatic conditions on their business operations?

Econet, Telecel and Netone will have to repair damaged infrastructure.

Fuel companies will have to consider the impact of damaged roads and bridged between Mutare and Beira. We may potentially end up with fuel shortages in the country.

NGOs operating in parts of Manicaland and Masvingo will have to count losses to their programs as damages were done to clinics, irrigation systems, dams, agriculture and more.

If you had shops or farming activities then you were also hit with buildings washed away or collapsing. Tobacco farmers have their barns destroyed and crops as well.

So when considering investment, are you fully assessing all the risks? When crafting business strategies and models, are you covering environmental issues fully?

This is food for thought for entrepreneurs, the unfortunate part is insurance companies consider issues such as cyclones ‘Acts of God’ and therefore do not cover this area meaning businesses have to fully absorb the losses and write them  off their balance sheets.

We have also noted over the years that varying rainfall patterns are also increasing the likelihood of earth tremors in the eastern part of Zimbabwe. We expect more tremors or even earthquakes to follow Zimbabwe in 6-10 months time due to the impact of Cyclone Idai. The tremors may even damage more properties that would have been repaired or those not affected by the cyclone.

Is this risk on your radar? Does your organisational strategy include it? Does climatic risk feature prominently in your management and board reports? Are you discussing this for the first time? Correct the weakness and closely monitor emerging risks coming from environmental changes.

Meanwhile we would like to acknowledge the sterling work done by the Honourable Joshua Sacco the Member of Parliament of Chimanimani West. He has been visible, getting his hands dirty, appealing for aid and keeping communication lines open. Great example of how to deal with disasters. The situation could have been better if we had planned better for the response given the lead time the cyclone took from Malawi and Mozambique before hitting our eastern region.

Perhaps devolution needs to be taken seriously and empower provincial governments because they have first hand of local developments. They are better prepared to take pre-emptive action before Harare gives a go ahead.

For more help for cyclone victims get in touch with Econet and David Coltart. They are running Appeal funds-kindly donate and assist our brothers and sisters in need.

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Diaspora Matters

To go to China or Joburg?

chinese

It is a Monday morning and traffic is heavy in Johannesburg. Our team is in the city for a tour of Chinese Factory Shops analysing the various goods sold by Chinese entrepreneurs. Our first stop is the China Mall in downtown Joburg. Its a busy centre with hundreds of shoppers trying out or buy various goods for resale.

On offer are various electrical appliances, clothes, hair products, shoes, handbags, plastic chairs and umbrellas. The most popular and fast moving goods are clothes bought for resale by South Africans travelling from as far as East London, Port Elizabeth, Mbombela and Polokwane. Foreign immigrants are also mixing and mingling in the crowded place ordering shoes, clothes and handbags. Zimbabweans, Tswanas, Mozambicans, Malawians, Swazis are also in the mix with trolleys full of goods which are bought strictly on cash.

Welcome to Chinese Factory Shops where goods are imported into South Africa from one of the biggest trading partners of South Africa-China! In 2017 South Africa imported goods worth $12.8 Billion from China making it the top import country for the rainbow nation. The trend of imports from the vast country continues with no other country threatening its pole position.

Evidence of the imports is best illustrated by the factory shops owned by thousands of Chinese entrepreneurs who ship thousands of containers of goods every month. They have the largest presence in the commercial city of Mzantsi and we were there to witness what exactly happens at these shops.

We visited more than 5 Chinese shopping centres and were impressed by how China is helping the growth of entrepreneurship in the region. They have huge discounts for clients buying in bulk (usually in boxes). Shoes cost from as little as R70 and resold from R150 and above in South Africa and more mark ups added for neighbouring countries. Dresses have price tags of R80-R120 and being resold after adding mark ups of 60% and above.

We observed interesting business models of entrepreneurs taking photos of dresses and shoes, adding a mark up and sending the photos to clients and asking them if they are interested. Positive confirmations resulted in deals being sealed with goods being purchased per order. What an efficient way to conduct business-buy goods with a ready market!

Some entrepreneurs live in Joburg and conduct deals with with clients in the country and neighbouring countries. After purchase the goods are send to clients and for neighboruing countries, they are send by bus with clients collecting them the following morning.

The big question we asked is whether its viable to buy goods from China buying airplane tickets and adding accomodation costs…or its better to simply buy from South African Chinese Shops?

This is the question we tackled in our latest book ‘Business Opportunities for South Africans’.

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