PROBLEM ANALYSIS

1. ARGUMENT

The cause of misery or poverty in Africa is directly linked to low production. Nations with low production are poor and undemocratic. Nations with high production have better economic livelihoods, which helps to shape the political direction of the country.

A country can only develop if more and more citizens participate in production, not just a few enterprises. Production means factories to produce goods. To produce you need training, technology and the capital.

Without factories there is

• not enough jobs,
• not enough products for local consumption (to stock the supermarkets) and
• too little to export.

Without enough exports

• foreign currency shortages occur
• the country cannot import necessities such raw materials, spare parts, medicines etc.
• balance of payments positions deteriorate.
• Government collects little taxes, not enough to finance quality health, education, water, roads, housing etc.
• budget deficits and huge loans, foreign and local, to finance the deficits.

These issues are at the heart of

• currency depreciation and
• inflation which destroys investments and livelihoods
• upsetting macro and micro fundamentals.

2. AFRICAN ENTREPRENUERS

Africa lacks training, technology and capital. To the extent that most Africans take the view that entrepreneurs are lucky people or connected to politics or from somewhere far. That entrepreneurs will come to start businesses and provide job opportunities. The fact is that there are just not enough entrepreneurs for everywhere. So we have to cultivate African entrepreneurs.

3. IMPEDEMENTS TO ENTREPRENEURSHIP

The four conditions or canons to be fulfilled at once to qualify for bank loans–

• applicant - the requirement for business experience, proof of business existence.
• equity- the requirement to show availability of own capital, which most Africans do not have.
• viability – the requirement to demonstrate viability of the project.
• security- the requirement for land and buildings and other securities which most Africans do not have. Lack of title deeds in some African makes it even harder.

These four conditions are too hard to fulfill all at once or limit even those Africans who attempt. Because of difficult in financing, lethargy sets in and there is no effort. The need for new planning becomes overwhelming.

4. PLANNERS

Things cannot happen naturally? Four areas of planning are critical, mobilization, training, capital formation, management.

SOLUTION ALAYISIS

1. PLANNERS

Civil society can provide the structures to do that, thus Global Zimbabwe Forum and ZDDC. ZDDC is a seamless platform for everybody, whether one is in civil society or not, embracing all without regard to political background, gender etc.

Mobilization - to mobilize the totality of the people into production. To explain, to bring people together.

Training – to produce new entrepreneurs who understand key issues in 1 above. Current training is largely to manage existing enterprises or to produce business plans which end up rejected by banks for failing to fulfill the four canons above.

Capital Formation – We need a process of resource mobilization or capital formation. In Africa money local banks are under resourced and to small to sustain development needs of Africa.

Management of processes – Civil society can provide a large platform of management. It is a shift in policy.

2. MOBILIZATION

We have to reach out to Zimbabweans in the Diaspora first. Rallies, Media coverage and a Pamphlet to be distributed explaining the key issues, inviting people to come forward.

3. TRAINING

As people come forward Mnotho Business Training engages them - to debate these issues, to explain procedures, to urge all to contribute to the Diaspora Fund.

Our model focuses on Viability as the only requirement. After Mnotho training a Mentor is allocated to each project to assist new prospect in coming up and detailing with a viable project – a complete business plan. As part of training the mentor is attached to each project.

4. CAPITAL FORMATION

In the pamphlet and Mnotho Training we urge people to deposit money into a trust account. The money remain in the trust account until reaches R50 million. During this period projects are processed and projects with complete business plans are approved and allocated space in industrial park(s).

5. INDUSTRIAL PARKS

Projects will be in industrial parks

6. HOW WE MITIGATE DEVIATION FROM IMPERICAL CANONS

When banks lend the applicant/borrower goes independently, in different directions. The four canons then become essential to measure certainty in ability to repay the loan. In our model applicants are housed or operate in one industrial park to ensure constant monitoring. Our money is on a clearly identified asset. If ZDDC lends R50 million it can show industrial parks where that investment is, rather than rely on security instruments only.

Security instruments have proved inadequate during this global mortgage crisis. Banks relied on instruments whose value ended up speculative. This means the empirical canons are not full proof either. There must be latitude to think otherwise.