In finance we have a term called VUCAH meaning Volatile, Uncertain, Complex, Ambigous and Hostile environment. It is one of the toughest environments to operate in and clearly it’s difficult to seasoned skills and expertise with solid track records.
Most financial experts are trained to operate in stable environments. Predictable environments where you can plan for a period of year or more. Most corporate plans and budgets span for a period of a year or more.
Fresh from the devastating impacts of the Covid-19 which plunged the world into a recession, Zimbabweans got shock news of the suspension of the mobile money platform and the stock exchange—no better definition of VUCAH!
Did you see this coming? Had you factored VUCAH in your corporate strategies? It is an open secret we were all caught flat footed hence the outrage by the business sector.
What is the impact on business confidence and operations? This is a long analysis and will need an in-depth research which is evidence based. What is as clear as mud is this latest move will severely impact the business sector. Perhaps the bigger picture is this is a good move which will ultimately benefit the nation at large but only time will tell.
Developing VUCAH skills
Appreciation of Economic History: Unless you have studied Economics at college or other advanced finance subjects at college level, chances are high that you are thin on economic history knowledge. For instance an accountant is likely to study Principles of Economics and to some extend Macro-Economics at college and post grad level but this is not enough. How was the Rhodesian Economy structured? How did they deal with economic challenges? Post Independence how did we fare economically? How did we deal with economic challenges? What are the common trends? How have we dealt with VUCAH challenges in the past?
Political Economics: Our economy is intertwined with politics. What has been the link over the past 100 years? What are the lessons learnt? What keeps repeating ad infinitum?
Benchmarking: Apart from the appreciation of the internal environment, what are the lessons learnt from across the globe? What can we learn from countries that have travelled the similar path? Inflation in Germany or South America? How did other countries dollarize? Did they successfully return to local currencies? What measures did they put in place and are they comparable to local ones?
Financial Modelling: Now that you fully appreciate the historical perspective of Zimbabwe, what are the developing issues? In resolving them, what are the chances of plucking some strategies from history books? What are the scenarios for solving inflation and forex challenges? Book strategies and off the hook? It is not the first time to suspend the Stock Exchange, it is also not the first time to close banks. What are the signs that led to closures in the past decade? Did we notice similarities in the run up to the latest closures? How many corporate companies developed financial models so as to guard them against economic shocks?
VUCAH Skills are the missing link in Zimbabwe—missing at college level and also professional levels. Financial newspapers in the country concentrate more on historical analysis and do not use the past data for future analysis. What does it mean when small scale gold farmers are paid in local currency? What is the impact on gold deliveries and forex earned?
What is the impact of the Covid-19 on the local economy especially the business sector? Was there ever an analysis of mobile money especially the risks?
The Covid-19 pandemic was a once in a 100 years event and the world can be excused for being caught in six and sevens but some local shocks should not come as a surprise. Its almost impossible to eliminate risks but they can be reduced through forward planning and analysis.
Do you have VUCAH skills on the board? Were they spot on in predicting the latest move? Do your corporate strategies incorporate VUCAH too?
As leading financial analysts scramble to write lengthy articles analysing the implications of the latest policy move perhaps the public should be asking them where they were in the first place? The world is interested in the future….did you predict this latest move? If not-you need VUCAH skills too like the rest of the population. Your historical analysis not good enough!
After this latest move, what other shocks await us?
Food for thought
