Brian Kazungu, 24/02/2021
Entrepreneurship is being globally accepted and embraced as an effective solution to solving many societal problems including unemployment and poverty but unfortunately, without proper knowledge, most businesses especially SMEs fail even in their first years after inception.
In a book titled The SME Handbook, according to Nico Jacobs, head of Absa Small Business, Small business failure rates are as high as 63% in the first two years of trading, of which some of the reasons for such a failure rate includes lack of skills, lack of funds and poor management.
As such, in its effort to promote entrepreneurship, EAI Virtual Hub (Entrepreneurship, Arts, Innovation), organises virtual meetings with experts from different economic sectors in order to address various challenges faced by entrepreneurs on a daily basis.
EAI Virtual Hub is a platform that seeks to empower young people in Zimbabwe to become financially independent.
Recently, it organised a virtual presentation under the theme Youth In Entrepreneurship, where business consultant, Chad Mhako, shared valuable business tips in response to questions by various entrepreneurs.
Chad is a seasoned consultant who works with startups and established businesses in helping them to develop concrete, actionable strategies which gives them better access to markets and finance through customer driven entrepreneurship approaches.
Below is a question and answer presentation adapted from Chad’s presentation on the EAI Virtual Hub.
Question: Quite often, there are many concerns on a wide range of issues around entrepreneurship, with some people professing their confusion on what business they should engage in. As such, what is your advice to such people who really believe that entrepreneurship is the way to go and yet they are not sure of the exact kind of business they must pursue?
Chad Mhako: In my experience as an entrepreneur and consultant. My response is always the same. Any business where you can secure a paying customer.
My philosophy is that your business starts the day someone is willing to pay you for what you have to offer.
Now, if you can repeat this profitably to scale, then you have a business. Once your business model is profitable, repeatable and scalable, then you are in business.
This is because paying customers are quite often the difference between a successful entrepreneur and the not so successful entrepreneur. When we start our businesses, we are usually trying to answer basic questions, no matter the jargon you choose to use.
Every business tries to answer the following questions: Who are my customers? Where are they? How do I get to them? Why should they buy from me?
I like to start with the customer in mind. Like I said, you don’t have a business if you don’t have paying customer. So whether you are farming potatoes from a sack, rearing chickens or doing the freshest deal in town. Everything boils down to the customer who pays.
This is why some people make mediocre products that still sell. The reason is that they know their customer, who they are, where they are. Basically, everything there is to know about the customer. They know their customer archetype.
People will ask, what’s selling these days or what’s fresh? These are me too kind of businesses. You can also do a-me-too business as long as you have a customer who will buy.
So, what does it take to know who will buy? The answer is – Customer Discovery!!
The basic building blocks to building a business are: 1) Discovering who your customers will be 2) Validating the existence of those customers 3) Then making sure your value proposition speaks to their needs 4) Then you build your enterprise.
Some people say that we will build it then customers will come. Others say, we will farm and then they will buy. We will manufacture first then customers will buy. Sometimes it works, but most of the times, it doesn’t. Don’t let the clichés fool you.
Question – What is your advice to aspiring entrepreneurs who have the passion for business and yet they do not know where to start?
Chad Mhako: I say start with a familiar problem, but make sure there is a large enough demand for the solution to that problem. Some problems are not worth fixing in terms of viability and profitability.
Question: From your experience, what have you identified as an effective approach of attracting paying customers or converting people in any community into customers who pay for what you have? Is it always about good marketing or it’s about your circle of interaction?
Chad Mhako: Knowing who you are your customers and where they are is a great starting point. My customers may be active on Facebook whilst yours are active in a market with little or no interest in social media. As such, if I recommend you to do a social media campaign which works for me, what you will get are vanity metrics, mere numbers which look wonderful on paper but mean zero to your bottom line,. So customer discovery is key
Question – From your experience in consulting for startups, which mistakes do you think we tend to do as young entrepreneurs and how can we avoid them?
Chad Mhako: The following are some of the mistakes that entrepreneurs make: 1) Hype over substance 2) Copying and pasting without context 3) Listening to clichés 4) Putting the cart before the horse, that is, wanting a quick buck and not being willing to build.
Question – How can one grow their startup with a minimum viable product, how can they attract more funding for growth?
Chad Mhako: Your Maximum Viable Product (MVP) allows you to harness market feedback. It’s not the end product, it’s part of the building process. Businesses are undervalued at inception and the further you are from ideation, the higher the valuation
Question: What’s the role and advantage of collaboration in business?
Chad Mhako: Collaboration is the new competition. However, it must never be collaboration just for the sake of it. If not well thought through, collaboration can lead to business collapse.
As such, all parties must know what are their rights and obligations under the arrangement.
You should never leave anything to interpretation. Collaboration can take many forms and one must know what works for them.
Chad Mhako is an Entrepreneur and Business Development Consultant who helps startups and established business develop concrete actionable strategies that improve their bottom lines. He is a Managing Consultant at Abiyedu Kin and a Country Manager at Energyneering EPCM.
firstname.lastname@example.org / email@example.com / @ChadMhako on twitter
SMM Workers ‘Offside’ on Asking Minister Chitando for the Removal of Gwaradzimba, Says Friends of SMM (FOSMM) Secretary General, Tapuwa Chitambo
Brian Kazungu, 23/04/2021
In an article published by the Herald on 22 April 2021 under the title ‘SMM workers want Gwaradzimba out, Zimbabwe Diamond and Allied Minerals Workers Union (ZDAMWU) were said to have applied for the removal of Gwaradzimba as Administrator of SMM.
It was also reported that they had done this through invoking Section 5(2) of the Reconstruction of State-Indebted Insolvent Companies Act (Reconstruction Act) which reads as follows:
Section 5(2) of the Act reads as follows: “The appropriate Minister, after consultation with the administrator, may at any time and in any manner, on the application of a creditor, a member of the company, the Master or any person who would have been entitled to petition for the winding-up or apply for the judicial management of the company concerned, vary the terms of a reconstruction order or cancel it by further notice published in the Gazette.”
However, Mr Tapuwa Chitambo, the Secretary General of Friends of SMM (FOSMM) highlighted that some conflicting issues around the status of SMM makes it strange for workers to seek help from the Mines Ministry.
“I find it strange that representatives of ZDAMWU would seek refuge from the Minister of Mines by seeking a remedy that is not specifically provided for in terms of the Reconstruction Act before establishing the status of SMM. Is SMM, a company as defined in the Companies Act or it is a creature that defies any legal persona?
Minister of Mines, Winston Chitando, and Minister of Finance, Mthuli Ncube, are on record having asserted that SMM is a subsidiary of the Zimbabwe Mining Development Corporation, as also confirmed by Gwaradzimba in a meeting with ZDAMWU representatives in March 2021.
Finance Minister, Mthuli Ncube, in his maiden budget included SMM on his list of companies to be privatized.
In clarifying his standpoint, Chitambo revealed that as Friends of SMM (FOSMM), they had made their own investigations and established the following facts:
1. Following the commencement of the reconstruction of SMM on 6 September 2004, Gwaradzimba’s first act was to dismiss the company’s board of directors.
2. In December 2005, the Reconstruction Order that was issued by Chinamasa without any judicial involvement was confirmed by Justice Kamocha on an ex-parte basis.
3. The records kept at the Registrar of Companies in Bulawayo show that on 12 November 2009, in terms of the CR2 form filed and signed by Gwaradzimba, shares were alloted to two companies Nickdale Investments Private Limited (Nickdale) that was issued 76% of the shares in the company with the balance of 24% being held by a company called SMM Holdings Limited (UK) whose address strangely was Gwaradzimba’s.
4. It follows that SMM could only be registered in the Records kept by the Registrar if it met the test of being a company and this precludes the involvement of the Minister of Mines in the affairs of the company.
5. A company necessarily is a creature of law and as such the Reconstruction Act creates no company but was part of a scheme to defeat the ends of justice.
Based on their findings, Chitambo added that in making an application to the Mines Minister, it is either ZDAMWU representatives know something that is not in the public domain or they just want to expose the fraud that has been a constant characteristic in the SMM saga.
He also stated that an admission by Gwaradzimba that his mandate was terminated, would follow that the application by ZDAMWU is ill-advised and should have been preceded by an application asking ZMDC to confirm its relationship with Nickdale.
Nickdale holds the majority of the shares issued by SMM, a development which makes the Minister of Mines to cease to have any legal nexus with SMM from the day shares were issued to the new shareholders.
This paper has established that a resolution was passed on 1 September 2011, ordering Gwaradzimba to hand over the Nickdale share certificates to former Minister of Mines, Dr Obert Mpofu, by the ZMDC board.
The shares were then handed over as ordered leading to Minister Chitando informing Parliament that SMM was a subsidiary of ZMDC based on the fact that the shares in Nickdale that were held by the RBZ were now held by ZMDC.
Chitambo concurred with ZDAMWU that Gwaradzimba continues to hold the Administrator’s office illegally since he relinquished this position to the ZMDC board chaired by Mr Ndlovu and thus also meaning that his purported ‘resurrection’ was unlawful and of no force and effect.
“Based on the above, it is bizarre that ZDAMWU would seek protection from a law that is no longer applicable in relation to SMM by asking the Minister of Mines to immediately replace Gwaradzimba with their nominee, Mr Taurai Changwa, when they are neither directors nor shareholders of SMM.” He said.
Mr. Frederick Kyle, a lawyer who has represented a number of companies and individuals including Mutumwa Mawere in litigations also commented on the matter.
“Mr. Gwaradzimba under oath has deposed to various affidavits asserting that SMM is a company still under his control and management yet in March 2021, he informed representatives of ZDAMWU that he was relieved of his duties in relation to SMM by Hon Mpofu.
He claimed that notwithstanding the fact that the shareholding of SMM had been altered and a new board appointed as required in terms of the Reconstruction Act, the reconstruction order needed to be cancelled in terms of s35 of the Reconstruction Act.
Mr. Chinhema on behalf of ZDAMWU said Gwaradzimba had intimated that Obert Mpofu (former Mines Minister) was responsible for the appointment of the board and new chief executive.
He, however, advised the workers’ union that he was re-appointed informally without any legal instrument providing for this clandestine appointment.
Pursuant to the operation of the ZMDC resolution, Mr Gwaradzimba was relegated to only deal with litigation brought against SMM by Mr Mawere.
However, it is not clear who Mr. Gwaradzimba reported to and still reports to since the handover of the control and management of SMM. Does the Minister of Justice continue to exercise jurisdiction in relation to a reconstructed company?
Assuming the control and management of SMM was not transferred to the restructured board that could only have been appointed by the company’s shareholders, then the records of SMM cannot be kept by the Registrar of Companies.
This begs the question as to whether the control of a company can be vested in anyone who is not its directors…. It is also curious how Gwaradzimba implemented a scheme of reconstruction without the knowledge of SMM’s previous shareholders.
Representatives of ZDAMWU have taken the approach that Gwaradzimba’s relationship with the company was not terminated as a consequence of the changed legal status of SMM from a company under reconstruction to a reconstructed company.
Ms. Janice Greaver, a member of the C2C-BOAF Corporate Literacy Initiative, said: “This matter exposes the pervasive illiteracy in our communities.
ZDAMWU members clearly believe that they now hold the position of some proxy shareholders of SMM on account of accrued wages and salaries incurred after reconstruction.
A company to me is a creature of law. It must have director to act in its name and not a Minister. This is absurd.”
Disgruntled SMM Workers Who Are Owed About US$36 Million Want ‘Incompetent’ Administrator Gwaradzimba to Be Given a Red Card
Brian Kazungu, 20/04/2021
Disgruntled workers from SMM Holdings (Pvt) Ltd who are claiming US$19 million in outstanding salaries from January 2012 to November 2017 and about US$17 million from December 2017 to date have called for the SMM Administrator to be given a red card.
The accrued dues are said to have been incurred during Gwaradzimba’s tenure wherein as SMM Administrator in terms of the Reconstruction Act, he was supposed to firstly dismiss the company’s board of directors in order for him to be vested with sole control and management of the company.
Mr. Gwaradzimba who assumed office on 6 September 2004 and was officially appointed on 14 September 2004 to be the SMM Administrator, was controversially awarded the contract without being subjected to any competition.
SMM was placed under extra-judicial reconstruction which divested and deprived shareholders and directors of the control and management of the company pursuant to an order issued by the then Minister of Justice, Legal and Parliamentary Affairs, Patrick Chinamasa.
According to information seen by this publication, SMM workers, through the Zimbabwe Diamond and Allied Mineral Workers Union have thus far sought the help of lawyers in their endeavour to have Gwaradzimba removed from the position of Administrator.
In their application which was filed with the Ministry of Justice, Legal and Parliamentary Affairs on the 13th of April this year, the union said that the Reconstruction exercise which brought about Gwaradzimba “has yielded no fruit whatsoever over the past two decades”.
They further added that the company is not benefiting anything from Gwaradzimba’s appointment as ‘apparently’ evidenced by the lack of ‘commercial production’ at the mines.
In a sworn affidavit, as a workers representative, Mr Justice Chinhema, Secretary General of the Zimbabwe Diamond and Allied Minerals Workers Union narrated the poor conditions that SMM employees have been subjected to, including lack of income and poor access to health facilities.
He said that their call for Gwaradzimba to be shown the red card stems from the plight of workers who are owed millions of United States dollars in arrear salaries and also highlighted that the same workers are exposed to terrible suffering because of evictions from their houses.
“The second respondent (SMM), under the administration of the first respondent (Gwaradzimba), has failed, neglected or refused to settle salary arrears in excess of over US$19 260 667.99 owed to current workers since January 2012 to November 2017. Salary arrears from December 2017 to date are yet to be computed.
991 ex-employees are owed US$17 676 537.50…..” Chinhema narrated.
According to details in the workers’ application to the Mines Minister, other creditors owed substantial amounts include regulatory authorities, the Mining Industry Pension Fund, NSSA and ZIMRA who collectively have an amount due totalling over US$6 million.
On behalf of SMM employees, Chinhema also argues that Gwaradzimba’s continued reign is unlawful following the transfer of the Ministerial supervision of the Administrator from the Ministry of Justice to the Ministry of Mines as directed by late former President Mugabe.
“Pursuant to that restructuring, the 1st respondent (Gwaradzimba) informed us that the administration and management of the 2nd respondent (SMM) was effectively transferred to a Board of Directors under the Zimbabwe Mining and Development Company (ZMDC) and headed by one Mr Ndlovu.
The 1st respondent (Gwaradzimba) intimated that Honourable Obert Mpofu was responsible for the appointment of the board and the new Chief Executive Officer. The 1st respondent (Gwaradzimba) admitted at that stage that his mandate was terminated.” Chinhema said.
Chinhema clarified that Ministerial oversight on SMM was transferred by the late President Mugabe to Mpofu when shares that were allotted by Gwaradzimba to a company owned by the RBZ, Nickdale Investments Private Limited, were transferred to the Zimbabwe Mining Development Corporation (ZMDC).
The shareholding scheme which was purportedly approved by shareholders and creditors is said to have been merely a gathering of people who were handpicked by Gwaradzimba who ‘fraudulently’ represented SMMH, a UK based company without its knowledge and consent.
Pursuant to this share transfer, SMM’s control and management was vested in ZMDC as a shareholder of Nickdale, leaving Gwaradzimba with no control except to handle SMM litigation matters.”
However, while commenting on the workers’ resolve to remove Mr. Gwaradzimba from his position following an application submitted to Minister Ziyambi Ziyambi, Mr. Mulaudzi of AG Mulaudzi Attorneys highlighted a number of challenges associated with the approach adopted.
“There is no provision for the removal of the administrator once appointed by the Minister. Even the Court has no jurisdiction to remove let alone cancel or vary the Ministerial order.
It would be interesting to see whether the section relied upon to impeach Gwaradzimba will come to the rescue of the union.
This Act was carefully crafted to prevent any aggrieved party from having any recourse either to remove the Administrator or vary the order without the involvement of the Administrator who has to be consulted by the Minister before any variation can take place.
While the workers accuse Gwaradzimba of incompetence and gross failure, the legal status of SMM is yet to be established and the Minister is yet to find any fault with the Administrator.
Despite the transfer of oversight, Chinhema revealed that Gwardzimba was surprisingly once again ‘informally’ tasked with administrative duties after the ZMDC Board squandered a US$16 million dollar capital injection which was splashed on purchasing of motor vehicles and salaries.
“His (Gwaradzimba) re-appointment was not in terms of the law but owing to the failure to follow the stipulated procedures in the Act, he assumed a de facto role as the administrator of the 2nd respondent (SMM).
He has continued to hold this office illegally as he had, by conduct and by fact, relinquished this position to the ZMDC board as chaired by Mr Ndlovu.” Chinhema appealed.
SMM, the once vibrant mining empire in Zimbabwe was controversially placed under the control and direction of a State appointed Administrator based on allegations that it was financially troubled and that its shareholders had externalised money and were acting with imprudence.
However, the RBZ and investigators who were tasked to do a fact finding work on the company dismissed these allegations and advised against placing SMM shareholders under specification and warned against the continued subjection of the company under the Reconstruction Act.
Regardless of the controversies surrounding the SMM Administrator’s appointment, the then Minister of Justice, Legal and Parliamentary Affairs, Patrick Chinamasa was adamant that his choice in Gwaradzimba was for the good of all the stakeholders.
When he was interrogated by legislators such as Job Sikhala and Mr Madzimure in a Parliamentary Debate on the 20th of July 2005 under the motion “Economic Challenges Facing Zimbabwe”, Chinamasa said “the government had to intervene because workers had spent 3 months without pay”.
Sikhala also warned against constitutional breaches that were inherent in the Reconstruction Act and queried the special interest that was being shown in the company by the Government Executive who were disregarding the rule of law in handling the matter.
Chinamasa then defended Gwaradzimba’s appointment by saying “So the government had to intervene in the national interest in order to rescue the company in order to ensure that the company continues to be a leading foreign exchange earner in our country.”
However, interestingly, the situation at SMM has seriously worsened in almost two decades and yet the same Administrator who was brought in as a saviour is still in charge of the sinking ship thus raising eyebrows on the real motivations which were behind the unceremonious ‘company grab’ by the government.
SMM’s Administrator, Afaras Gwaradzimba Struggles to Provide Answers on Mawere’s Mount Pleasant House after 17 Years of Being in Charge
Brian Kazungu, 28/03/2021
Afaras Gwaradzimba, the State appointed Administrator for Zimbabwe’s Shabani Mashava Mines (SMM) which was placed under Reconstruction in 2004 is struggling to provide answers on the status of a house in Mount Pleasant, Harare which belongs to Mutumwa Mawere.
When asked about an update, after 17 years of being in charge of the house which was earning rentals from tenants, Gwaradzimba expressed ignorance on how under his authority, SMM was collecting rentals on a private property belonging to someone else.
He confirmed that even though SMM did not have the house’s title deeds, the company was actually receiving rentals for the property and paying the related rates.
In an effort to treat this potentially criminal case with a civil approach and make good the anomaly, Gwaradzimba made instructions to the effect that a Trust Account be created so that money can be properly accounted for.
“I am advised by Mr. Mutumwa Mawere himself that he holds the title deeds for the Mt. Pleasant house, and the Deeds are in his name. I will ask him to send me a copy of the deeds.
I there kind (sic) ask that you create a Trust Account under SMM, transfer all the rentals that have been received from the lease of the house, into that Trust Account and then charge against the account, all expenses paid by SMM in respect of the house, including management fees payable in accordance with the Estate Agents Act.” Gwaradzimba instructed SMM Management
He could however not explain how the current arrangement came to be and referred further correspondence to the Dube, Manikai and Hwacha (DMH) law firm which is the company’s legal representative.
Mawere who bought the house when he was still in the United States of America said that he never made an arrangement with SMM to manage his personal property since there was a tenant paying rent subject to management by an estate agent.
He questioned how the property ended up being managed by SMM under Gwaradzimba’s authority and yet state power was only limited to the affairs of the company and not to the private property of the owner.
“SMM was my company. Mnangagwa/Chinamasa, using Gwaradzimba/Manikai used state power to introduce a decree that had the effect of divesting and depriving the shareholders and directors of the company of the right to control and direct the company.
The control and management was then vested with Gwaradzimba. Prior to this, I had a relationship with the company and after this, by law, I ceased to have any relationship with the company.” Mawere said
According to the law, as per the reconstruction of SMM, state power was limited to the affairs of the company and not to the private property of the owner.
The reconstruction of SMM came after Mawere was allegedly accused of foreign currency externalisation which was however proved to be lacking substance according to a report on the findings of the investigation.
In the report, it was stated that “Following extensive and exhaustive investigations, it was established that the allegations of externalisation against Mr. Mawere were unfounded and baseless. It was also established that Mr. Mawere was neither a director nor shareholder of SMM. There was no direct legal and factual nexus between him and the company.”
Mawere was then specified after a failed attempt by the government of Zimbabwe to extradite him from South Africa and his company was subsequently placed under reconstruction.
According to the same report, the purpose of the specification was to further investigations on the activities of Mawere’s business empire.
The report also reveals that Gwaradzimba and Manikai who is part of the law that has been tasked with the issue, both had a previous relationship with SMM before the specification and reconstruction of this entity that had asbestos mining interests in Zvishavane and Mashaba.
It states that “Mr. Gwaradzimba was the auditor of SMM during 1996 through 2001. Mr. Manikai was the legal advisor of SMM and ARL from 1996 through 2004. Notwithstanding, Mr. Gwaradzimba was appointed Administrator of a company that he once audited.
Mr. Manikai is now acting against his former client. This raises serious legal and ethical questions that need to be addressed at the appropriate time. However, it is the considered opinion of the Investigators that the appointment of Gwaradzimba and Manikai was ill considered and, therefore, inappropriate.”
Various political and economic experts have reiterated that the issue of the rule of law and property rights posed a serious challenge on the economy especially when it comes to attracting both local and international investors into the country’s ailing economy.
Zimbabwe’s economy is currently mired in serious challenges characterised by lack of employment, poor infrastructure, industrial closures and rampant corruption across the sectors.
In separate investigations and findings, while still being the Governor of Zimbabwe’s Central Bank, Dr Gideon Gono castigated the procedural anomalies adopted in handling the SMM matter and cautioned of Gwaradzimba’s probable selfish personal interests in the whole saga.
Gono pleaded with President Mugabe to respect the rule of law for the economy’ sake and for the good image of the country by recommending the de-specification of Mawere and for the return of his companies and assets back to him.
“Though there is reference to the Fifth Table of the Seventh Schedule of the Companies Act, which sets the payment levels for liquidators and administrators, the fact still remains that Mr
Gwaradzimba, the Administrator is getting payments set at 6% of gross proceeds, of all
SMM companies which is even more lucrative than shareholders themselves, let alone revenues to Government.
Your Excellency, there is genuine need for the relevant sections of the
Companies Act to be modified. The Administrator’s activities also seem to have entrenched interests of needlessly permanently dispossessing all Mr Mawere of his assets.
…….It is also recommended that Your Excellency approve the de-specification of Mr Mawere and his companies so as to pave way for a new beginning, particularly in the context of investment promotion and empowerment in Zimbabwe.” Wrote Dr Gono.
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