While the obvious challenge exists for Zimbabwean firms trying to raise working capital and access credit lines in offshore markets using 2008 financial statements which are not meaningful in terms of the numbers, i think all hope is not lost.
Previously, companies in Zimbabwe may have viewed company valuations, due dilligence exercises and revaluation of assets as an academic and expensive exercise or one merely to meet regulatory prudential benchmarks. Now there is need to perform asset valuations and benefit from the strength of balance sheets that are more comperable to other companies in the region. To this end, coming up with audited half year accounts with revalued assets helps companies to approach prospective financiers and investors with more realistic numbers.
Companies also need to benefit from correct asset classifications and use i.e. investment category (IAS 40) or owner occupied (IAS 16) as this has a significant impact on reported earnings and capital e.g. for land and buildings.
These are times for quick wins and companies that report financials that reflect a true and fair view, underlying performance and investment potential are bound to win the hearts of any discerning offshore investor.
In addition one would expect real production to take place with capacity utilisation around 60-80% being acceptable by end of year. The government also needs to play ball in ensuring policy consistency, political stability, restructuring of the high and punitive tax regime and review of investment incentives such as tax holidays across the various economic sectors.
Dony Mazingaizo, BAcc Hons, ACCA, Dip IFRS, Dip Banking, BCompt Hons (UNISA), has special interest in IFRS and Financial Management
I look at companies like Econet and i dont see them struggling. The reason being that their sponsors went out of zim not just to escape the economic hardships but to ensure the going concern of their companies thru continued capacity building. It's easier for Econet to attract funding for its expansion than any other ZSE listed company because when Masiyiwa left zim, he didnt sit on his brains, he made sure Econet (and himself) continued making noise and building a business case for itself over the years. If the Mutumwas, Makonis, Mtulis et al of zim business had done the same, recovery would have been faster and less painful.
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