Crowd funding: A case for innovative retooling strategies towards increased trade under AfCFTA


Zimbabwe can be said to have turned the corner, from a hopeless case three years ago, to one of the most promising economies in the sub-region.

As confirmed by one of Zimbabwe’s leading economists, Eddie Cross in an interview on ZBC-TV, the Transitional Stabilisation Program (TSP) provided firm ground for growth through righting macro-economic fundamentals such as a stable exchange rate, receding inflation and much needed economic reforms like ease of doing business, consumer protection laws and more.

With these fundamentals firmly in place, focus is now on consolidating these gains under the National Development Strategy One (NDS1).

Thus, this submission proposes, if not already under implementation, a homegrown funding mechanism for Zimbabwean businesses based on co-operation and guided by the country’s national interest and vision which are tied to the United Nations Millennium Development Goals (MDGs) as well as the AU’s Agenda 2063.

As with the recently launched African Continental Free Trade Area (AfCFTA), which is a culmination of the continent’s long struggle for self-help, Zimbabwe as a country needs to also consider looking from within itself for funding the anticipated economic growth going forward.

Notwithstanding anti-Africa’s development rhetoric from individuals like Howard Nichols (YouTube, 2020), the AfCFTA is expected to propel the continent towards economic prosperity and independence by creating the biggest market by population (1,2 billion) and GDP (US$2,5 trillion) (UNCTAD, 2020) and, therefore, Zimbabwe as a member needs to get its systems ready for what lies ahead.

Accordingly some of the funding strategies may derive from local Zimbabwean economic practices that have long helped especially, women to create wealth for themselves and their families.

The practice is variously known as mukando, round or party and growing up in Zimbabwe, many will testify to being treated to monthly mini Christmas parties as our mothers in many a ghetto gathered to partake in this money sharing venture.

Essentially, this was crowd funding akin to GCMeans’ collective capitalism.

According to Means(1957), collective capitalism entails co-operation among economic players for common gain while maintaining individual ownership of a business.

Among countries that have employed collective capitalism is Japan after WWII with remarkable results despite criticism of the strategy.

Reflecting on this mukando practice which was and probably still is widespread in Zimbabwean communities, one gets the sense that the idea, if adopted by business, may work to mitigate some of the retooling challenges that bewilder the local manufacturing sector, itself key to Zimbabwe becoming a trading giant on the international market. International trade is characterised by competitiveness and world class standards (UNCTAD, 2020).

Thus, Zimbabwean manufacturers need to up the ante in producing world-class goods and services and become competitive on the international market.

But, this can only be achieved if funding for retooling is affordable, timely and adequate.

Sadly, government efforts through various funding mechanisms have been inadequate to cover everyone.

Even where lenders fill the gap, industry always decries the cost of money which they regard as prohibitive.

In this regard, therefore, a homegrown solution to this problem can be found in mukando which in this case may be referred to as corporate mukando because it is customised for corporates or business in general.

Mukando as practised by our mothers, entails a group comprising a limited number which would each set out to contribute equal amounts for an agreed period to fund one member at a time for the purchase of things such as household utensils, furniture or even building materials for each of the contracting parties.

Thus, within a period of say, six months characterised by sacrifice, dedication and co-operation, each would acquire wealth that they may not have been able to raise on their own.

The contracting parties put their faith and trust in the hope that as people bound by a common goal, none of the members would want to jeopardise their good reputation by defaulting or swindling others.

The women realise that they are incapable as individuals, therefore, it makes perfect sense to join hands with others in order to resolve an entirely individual problem.

From the foregoing, it is proposed that local business adopts a mukando type of funding in order to retool in anticipation of the opportunities that will come with the AfCFTA.

Affordable finance seems to be the main stumbling block to sustainable retooling itself a pre-condition for competitiveness in the international trading arena where those that offer competitive products, both in terms of quality and pricing, are most likely to survive.

Thus, it makes sense for Zimbabwean business to be guided by national interest, vision and the need for individual growth and in this regard, enterprises need not view themselves as adversaries but as co-operating partners whose aim is to advance the national interest.

Thus, borrowing from the women’s mukando funding scheme, business, especially those designated under Export Processing Zones (EPZs) may form groups of, say six or less, where each will commit an agreed amount on a rotational basis that will be used by each enterprise to fund things like acquiring new machinery, raw materials, recurrent budgets and so on.

Institutions of higher learning may even consider this approach among themselves to retool in order to produce COVID-19 fighting products for both domestic and international markets.

With appropriate modifications and legal safeguards, the idea is to unlock cheap, interest free finance that will enable enterprises to attain optimum capacity without a debt burden leading to them producing world-class products that will withstand healthy competition from bigger players in AfCFTA such as South Africa and Nigeria.

For its part, government can support such co-operating enterprises by offering a range of incentives like tax holidays, breaks or other non-monetary interventions in addition to negotiating for most favoured nation and national treatment in bilateral investment treaties while also ensuring regulatory frameworks to prevent formation of oligopolies that may grow out of control.

Thus, the role of diplomacy at State level is to project national interest which the co-operating enterprises should then uphold through rising to the occasion by coming up with sustainable innovative funding solutions like this corporate mukando.

Co-operation, therefore, becomes the cornerstone of this strategy while also adhering to competition and fair business ethics as enshrined in municipal and international trade law.

In a nutshell, corporate mukando can be a sustainable solution to the problem of funding for small to medium enterprises but essentially can be suitable for wider application.

Local economic practices can be modified and tapped to help the country realise it’s national interest and vision in the cutthroat trading arena brought about by AfCFTA.

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