AfricaCom 2009

If you are of a Telecomms mindset, then no doubt you will be aware of the annual AfricaCom conference that takes place in Cape Town in November and is now in it's 12th year.

This year the line up of speakers and topics is stronger than ever, no doubt due to the inclusion of yours truly amongst that esteemed gathering of presenters. Actually, it is very flattering to be asked to give a Zimbabwean perspective at this pan African event, albeit in a very small and focused way and I am looking forward to the opportunity. (Even though my friend D, thinks I must have paid them to let me speak..bah!)

Undoubtedly the telecomms industry is one of startegic importance to our country as we look to find ways to open up the airwaves. Being land-locked, access to the myriad of undersea cables that are snaking their way down the East and West coasts of our continent is particularly mired in international red tape and regulatory complications. However there is absolutely no doubt about the correlation between access to affordable bandwidth and the speed with which a developing country can grow. Here's hoping someone in authority is listening!!

Meanwhile we are left to contend with the severe limitations of our outdated infrastructure and legislation and I have been asked to address the aforementioned audience on the subject of strategies to increase margins in an environment of falling ARPU's. Now there's a thought! Although Zimbabwe is on a wobbly but nevertheless worthwhile recovery path, we still have the daily peaks and troughs of emotion trying to operate here and in ARPU terms (that would be average revenue per user D!) we are experiencing the wild fluctuations that are bound to be part and parcel of a change in currency and revaluation to real terms of the costs of goods and services. Which brings me sadly back to my old hobby horse. It seems to me that the network's approach to falling ARPU's is to simply jack up the price...without any commensurate improvement in services..... hopefully they'll pitch up at the conference and learn something!

Speaking of speaking, I'll also be at the Annual Institute of Chartered Accountants Winter School in Nyanga next week, to discuss investment opportunities in Zimbabwe. Depending on who has said what to the press in the preceding days, it will either be a riveting and exciting conversation or a very short chat.. we shall see.

While I'm on the subject of fluctuations, I wonder if there is anywhere else in the world where business is subjected to the same level of confusing legislation and contradictory communications as we are blessed with here. Take my other favorite subject, wine, for instance.

Having reduced duty on importing this product to zero percent, for producers with SADC certificates of origin some 12 months ago, we suddenly find ourselves with a new 15% duty imposed upon us for the same product. Is this protectionist? Does it reflect an abject lack of understanding of free market principals? Is it an attempt to increase Government revenues or reduce currency outflows? Either way, it flies in the face of what the SADC and COMESA trade agreements set out to achieve and in reality probably reduces the net tax revenues for the fiscus. So the more that things change here, the more they stay the same it seems.

Till next time, salute!

Geoff

The trees in front of us are thinning!!

I don’t know if you’ve looked at our share price graph recently, but if you are of a medical disposition you might think that the patient is dead…. Flat lines on an ECG are never a good thing!! However, as we all know, looks can be deceiving, so my advice is to always take a closer look.

At a consistent 3/10s of a US cent we of course believe that we are undervalued, but it takes a while for the good news and the progress to filter through to the market, so let’s not get too upset about that just yet.

But while we’re on the subject of heartbeats, mine skipped a few the other day. I discovered something that I feared may be lost forever, and with that discovery comes a new lease on life, a new inspiration, a reminder of why we get up and do this every day.

Now before you get too excited, let me tell you that we, along with everyone else, are not out of the woods yet… but what I rediscovered was the lost art of being able to focus on the real issues of our businesses; marketing, selling, product development, production, and all this because we have a vaguely stable currency and a marginally less tilted playing field.

I was in Zambia last week, and in conversation with a group of local executives, the subject of which was “the Zimbabwe threat”. Interestingly they were very concerned about losing ground and opportunity to their Zimbabwean counterparts. When I asked them why they were so worried about their decimated neighbour, they were very quick to point out that as a nation, during all of the chaos and disruption, the business community somehow survived, and in some cases even flourished, so how much more energetic, productive, creative and successful will Zimbabwe now become as the economic tide begins to turn?

They have a point.

And already we can see that at Celsys. Our energy is being channeled into productivity, our efforts into areas of growth and management and staff are seeing real reward and progress for their daily endeavours.

As I said, we are not out of the woods yet, but it sure is good to see that the trees in front of us are thinning!! Of course “the future just ain’t what it used to be” (thank you Meatloaf), but if we can take the best of our previous experiences and carry that with us into our future, as inspiration or just as a reminder that what we once had was real, then surely that is a good thing.

Geoff

'Over a barrel'

Why is it that utility companies (both public and private) feel they must compensate for the last ten years of losses in the first ten weeks of “dollarisation’? The term “over a barrel” starts to resonate a little too strongly right now as we learn to come to terms with ludicrous price demands from service suppliers, who somehow also believe that they should squeeze us to suffocation point as a supplier.

Clearly the term “unity” remains the preserve of the political arena, whilst commerce and industry continues along a far more carnivorous “dog eat dog” path to financial enlightenment.

Well let me say this to anyone who finds themselves ready to let their greed devour their Zimbabwean customers or suppliers; the same innovative survival culture that has brought us this far, can just as creatively be applied to finding more competitive supply chains, and more responsible customers, here or elsewhere, for the playing field is now level in USD Zimbabwe.

So, we continue to strive for quality improvements every day, with our costs firmly under control and our financial systems now dealing with manageable numbers, the time has come for us to turn our attention to marketing our products and services… now there’s a concept we haven’t had to consider for a while!

I’m prepared to bet that the companies that apply their collective wisdom to creating and providing goods and services that customers want or need, at a fair price and on mutually beneficial terms, will still be here five years from now and operating successfully… whilst those that chase somewhat shorter term enrichment goals, may well find their brands disappear along with their customer’s long abused loyalty!

Ok, that’s it for the soap box this month!

Geoff Goss
Country Manager
LonZim Plc
Chief Executive Officer
Celsys Limited
Block 5
Arundel Office Park
Tel: +263 4 369160
Fax: +263 4 369179
www.celsys.co.zw
www.lonzim.co.uk

hey presto

Well.... 2009 has started... perhaps not with the bang we would have wanted,
but certainly I can hear the faint sizzling of a lit fuse!!

To be honest, we wondered if we would be operating in January when we shut
up shop for Christmas, but we got back to endemic dollarisation, and "hey
presto", everything has changed again!

In an environment where the dollar we collect today has the same value as
the one we spend tomorrow, there is a sense that we can start to get back to
what we should be doing every day, managing our business rather than
consuming every waking hour trying to hedge our currency bets, and stemming
the depreciation blood flow! The down side of course is that already
suppressed volumes have, and will continue to plummet even further, but if
our capacity utilization is 10%, and we can produce that 10% in at least a
breakeven fashion then certainly we are better off.

The next trick of course is how to start using up some of the excess
capacity!!

Obviously it's not going to be utilized for this economy in the foreseeable future, so now more than ever, there is an urgent need to export!
Interestingly, from a Celsys perspective we believe that we can start to
focus appropriate amounts of time and resources to this endeavour, with
hopefully meaningful results.

I would also like to talk briefly about Celsys Print at this point. I am very pleased to report that we have made some important high level appointments at the Print Division and we have embarked on an ISO quality
standards programme to ensure our international competitiveness is more than just price based.

As you will recall, Linc Pearson joined us from Fidelity Printers last year as Technical Manager responsible for all production and quality matters. In January we also appointed a new General Manager, Adam Lemon who has been
tasked along with Linc, with taking the business to the next level of
success and beyond. Adam's predecessor, Dhiru Raja, has be handed the
biggest challenge of all, as his new role is to establish and develop
regional joint ventures for us in the security printing field. He has also
been charged with the crucial task of securing export markets.

May I take the opportunity to wish them all the very best of luck, as
together we start the process of taking Celsys out of a care and maintenance
phase and into a period of aggressive, sustainable and profitable growth.

That's it for now... Happy New Year!

Geoff Goss
Country Manager
LonZim Plc
Chief Executive Officer
Celsys Limited
Block 5
Arundel Office Park
Tel: +263 4 369160
Fax: +263 4 369179
www.celsys.co.zw
www.lonzim.co.uk

WARS are FOLLY

I probably don't have to tell you that nigh on every business in Zimbabwe is staggering towards the annual shut down for a bit of respite from this twister of an economy. How it is possible that we still have no political resolution, or injection of economic common sense is beyond me, so we continue to dance along the tightrope, which really now appears to be burning up behind us.

Be that as it may, we have a responsibility to do what we can in the best interests of our stakeholders, and to that end, we somehow manage to keep our staff employed, and customers supplied and our creditors paid.

We have made the great leap of faith into the world of FOLIWARS this month, albeit with only certain of our products, as the RBZ felt that the sale of airtime and security printed documents, should not be in any currency other than Zimbabwe Dollars and at a controlled price! Now there's a thing! Interesting word FOLIWAR. In my view all WARS are FOLLY, but here's hoping this recent initiative is not! Time will tell.

Also in the 'Good News" section I am pleased to advise that our partnership with FMNA (see last months Blog) is already bearing fruit and we have been part of the first licence sale in Lesotho and anticipate the next one to be here in Zimbabwe. Although the commission on the licence fee is most welcome, the real opportunity for us lies in the on-going revenue generated from the messaging traffic, all of which is US$ based. Of course there's nothing for nothing and we will have on-going account management responsibility for our sites and are also undertaking the role of IM support centre for FMNA's Chatbar product. If this all seems like Follywords to you, take a peek at www.chatbar.com and www.fmnsoft.com.

If you are reading this, it means you are still alive, and that's a good thing. I hope you have a relaxing Christmas break and if you are outside the country looking in, keep hoping that the change is coming soon, and if you are on the inside looking out, well done for getting this far!

Geoff Goss
Country Manager
LonZim Plc
Chief Executive Officer
Celsys Limited
Block 5
Arundel Office Park
Tel: +263 4 369160
Fax: +263 4 369179
www.celsys.co.zw
www.lonzim.co.uk

The Wild West

Blimey what a rough ride we're having.

This ongoing political impasse (euphemistically put I thought) is certainly not helping our economy, but we're not going to let that upset this wee blogger now are we!!

Having released the Celsys full year results to June 2008, I thought it would be important for me to spoil a good story with a few facts surrounding questions that arose at our recent analysts briefing.

First of all, Celsys does not print Zimbabwe Dollars, so please don't drag us into that debate any further. Secondly, yes we had a tough year, but in real terms, ie measurable US$ equivalents, we had revenues of over a million dollars and a profit before tax of some 20%.

Admittedly it is predominantly a paper profit, comprised of exchange gains following a very generous move by LonZim that converted a foreign currency debt to a fixed Zimbabwe dollar one.

Fairy Godmothers don't really come around that often, so we should be most appreciative of this gesture of goodwill!

Subsequent to the year end however there has been a flurry of activity that I trust you will also find of interest.

First of all, we are delighted to welcome Linc Pearson to the Celsys Print Team. Linc recently retired from Fidelity Printers where he has spent the last 28 years in charge of production and quality. He joins us with the mandate to take Celsys Print to the highest international quality standards available as we position ourselves for significant regional expansion.

There is also news at Celsys Comms, who have recently signed a regional partnership deal with FMN Africa that during the course of 2009 should create a renewable foreign currency income stream for the division. FMNA has a proprietary technology that enables email, instant message and sms communications, seamlessly to and from GSM standard mobile phones, without the need for any application on the device.

Celsys has exclusive rights to the technology in Zimbabwe and non-exclusive rights in the sub region. We are currently participating in trials with two well known mobile networks in the region and will be operating the IM support centre on behalf of FMNA from our premises in Harare.

Also in the Comms division, we have been invited by another very well known mobile operator to put together a mobile payphone solution for them in one of our neighbouring countries, and I hope to be able to bring you more on that before the end of the year.

So you see, it's tough, but it's not all bad! Watch this space as they say in the movies…and let's face it, it is a bit like the wild west at the moment isn't it?

Geoff

Opportunities, opportunities, opportunities

So I found myself on stage the other day, asked to speak at the ABAZ Just Business conference in Zimbabwe on the subject of the investment climate in this country. You can see the slides from the presentation here.

Despite all the doom and gloom it turned out to be quite easy to see the opportunities that are likely to unfold in a resurgent Zimbabwe and it is most pleasing to note how well Celsys is positioned in this regard. I won’t pretend that we are making a fortune in the present environment, but it is clear that we are well positioned to take advantage of the growth prospects of the future.

IT and Telecoms are the next generation of infrastructure, that along with Financial services, form a tripod upon which emerging and recovering economies are built. Technology is such that with the right attitude and money, an emerging economy can simply leapfrog many tiers of development and go straight to the cutting edge, skipping out all of the painful in-between stages that other economies have passed through.

Sounds simple enough.. but what is the catch?

Well, in my mind the catch is very simple too… you can have the latest and greatest tools, technologies and infrastructure, but if you do not possess the skills and knowledge to take advantage of them, you may as well remain in the comfort of your dark age.

Now is the time to do something about skilling up in preparation for the change that is inevitable. We boast about having one of the best educated populations in the region, but education per se is only the start of the skills development process. We certainly have the material to work with, but are we investing enough of our meagre resources in giving our people the essential skills they will require in a new competitive environment? I don’t think so.

And this will be my hobby horse for the coming year at Celsys. Having secured our financial safety with the backing of LonZim, I am now setting about ensuring that our valued people are given the right set of knowledge tools that they need to survive the current turmoil, thrive through the change and excel in the future.

Wish me luck….

Geoff