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Tinashe Mukogo

@tmukogo

Jun 14, 2023 • 13 tweets • 6 min read • Read on X

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1. Why 🌎International Companies Like Standard Chartered Exit Markets Like #Zimbabwe🇿🇼

Standard Chartered Zimbabwe was a profitable bank that had been in Zim for over 130 years. A week ago, they exited Zimbabwe. Why?

Thread + V11s👇🏾#StanChart #FBC

2. Standard Chartered (StanChart) in Zim was a solid bank making good money. In 2016 StanChart made $13 Million in profit and was the 3rd largest bank by deposits in Zimbabwe.

3. Compared to StanChart Globally, however, the Zim operation was still a “small fish"

StanChart Zim Revenue = $55.02 Million
StanChart Group Revenue = $14.06 Billion

StanChart Zim Size = 0.4%

The good thing was in 2016 the small fish had limited drama & was profitable.

4. When you are a small fish in a big pond not attracting unwanted attention is very important.
That is what StandChart Zim did from 2016 - 2018.

They did not really feature in the StanChart Group Annual report & when they did it was for good news -they had won an award👏🏾

5. In 2019, however, that changed. Zimbabwe was suddenly called out in the annual report because it had contributed to the increase of Credit Grade 12 Balances😤 (which is really bad see why in the next tweet).

6. Credit Grade 12 is the worst rating aside from defaulting.

Think of that friend who never pays anyone back - Credit Grade 12.

Zim being called out despite being only 0.4% of the business was a bad sign.

This wasn't necessarily local management's fault however...

7. ...These downgrade issues were probably linked to the reintroduction of the Zim Dollar in Feb 2019.

Whatever the case, the small fish had started to pollute the water in the pond and attract attention,

8. The following year, 2020, Zim was again in the group's annual report. This time because of a decrease in Credit RWA driven by the depreciation of ZWD against the US Dollar.

Whilst not technically always a bad thing it was clear that Zim was on the radar due to currency risks.

9. In 2021, Zim showed up again more related to COVID.

Considering StanChart is in 59 Countries, it's interesting how Zim ended up as one of the examples - attracting attention again.

Why does being mentioned in the annual report matter? See the next tweet...

10. The annual report is the most important document a public company releases yearly. The CEO, CFO, Directors etc spend 100s hours reviewing it.

A small operation should not keep popping up with anything but good news.

Otherwise, Execs start asking why are we in that market.

11. Unsurprisingly in 2022 the decision was announced. StanChart would be exiting 7 markets including Zimbabwe to focus on the "most significant opportunities for growth" (i.e. bigger fish that swim nicely)

The small fish was getting kicked out of the pond.

12. The exit was completed last week with FBC acquiring 100% of Standard Chartered. Another international company bowing out of Zim.

The same applies to most Global companies when small markets become a headache - the effort is not worth the return and so they rather exit.

13. In conclusion, if you are a small market like Zim, to prevent foreign companies from existing - you need to be stable, & predictable, & not take management's attention.

This is not easy in Zim & so other companies may still follow.

What do you think? Comment & Retweet👏🏾

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More from @tmukogo

Tinashe Mukogo

@tmukogo

May 29

1/14 Over half of Zimbabwean property owners have more than 80% of their net worth tied to property, compared to about 39% in the United States.

This is a problem that can also have a damaging impact for businesses and in the long run for property owners.

Here is what every property owner, investor and entrepreneur needs to know.

🧵 THREAD🧵

2/14 More Money, More Property

The chart below is from an online poll that asked property owners what portion of their net worth was tied up in property.

Of the respondents, 56% responded that more than 80% of their net worth was held in property.

3/14 This is not surprising.

Based on the research conducted in the last few articles, (see below for example) we identified that individual and institutional investors have disproportionately invested in property.

This is understandable, but may also present a big problem from an economic and business growth perspective.

For businesses to thrive, “risk capital” is needed.

Risk capital is money invested in new ventures, growing companies, or any entity that has a higher risk profile than the norm but also offers the opportunity for much greater returns.

Money invested in property is what I would call “idle capital”.

Property is not easy to divide or sell quickly, so that capital doesn’t “move” much; it essentially stays idle.

It also tends to be less risky, especially in markets like Zimbabwe.

If most of your net worth is tied up in property, you are less likely to invest much in other ventures.

Read 14 tweets

Tinashe Mukogo

@tmukogo

May 22

1/17 Major retailers in Zimbabwe are struggling.

OK is in distress. Choppies is out. Others are scaling back.

But one store—Food Lover’s Greendale—is not just surviving. It’s booming.

I partnered with @InjectaAnalytic to uncover the hidden data behind this growth.

THREAD🧵

2/17 One of the most important elements in retail is location, as it drives foot traffic.

The data below shows the number of upper to high-income homes within 2 km of the Honeydew Shopping Centre, where Food Lovers Greendale is based.

The data shows approximately 2,089 upper-middle to high-income homes near Food Lovers.

This indicates a strong base of customers with strong spending power, which is good.

But how does that compare to others?

3/17 Below is a comparison of Food Lovers Greendale, which is privately owned, and the other two Food Lovers' Outlets in Harare, which OK Zimbabwe owns.

The data shows that the Avondale branch has marginally more residential properties nearby than Greendale, which may indicate a more favourable location.

The low number of homes nearby in Sam Levy is likely due to the larger property sizes in Borrowdale, which may also indicate slightly higher spending power.

From this, it is not clear that Greendale has a significant advantage, although one trend that may also benefit the location is "densification."

Read 17 tweets

Tinashe Mukogo

@tmukogo

Apr 25

/1 Demergers and Butcheries

Demergers have become quite popular, with companies like Innscor, Econet, and Meikles pulling them off in recent years.

The goal of a demerger is often to unlock value, which, interestingly, is similar to what butcheries do.

Let's unpack!🧵

/2 Demergers are essentially when a company splits off one of its businesses to operate independently and often to list separately.

These transactions "unlock value" because the parts of the business, when separate, are often more valuable than the whole.

A bit like a cow.

/3 Imagine the stock market as a place to buy meat, and you own a butchery where you are trying to sell a whole cow.

Now, most people don't want the whole cow because they don't know what to do with it.

Read 10 tweets

Tinashe Mukogo

@tmukogo

Apr 24

1/23 Simbisa Brands: A cash printing machine.

A good Cash Conversion Ratio, which measures a business's ability to turn profit into cash, is typically anything above 1.0. Simbisa Brands has a Cash Conversion Ratio of 2.6 based on its latest results.

For comparison, Innscor and Delta, both companies that are performing well, have cash conversion ratios of 1.0 and 1.8, respectively.

Simbisa is doing what most companies struggle with: turning profits into lots of cash.

Here’s how—and why investors should take notice.

Let's Unpack!🧵 THREAD 🧵

2/23 About Simbisa Brands

Simbisa Brands is in the Quick-Service restaurant business.

Their biggest offerings are related to chicken, with brands like Chicken Inn, Nando's, and Galito’s.

They also have a strong presence in other categories, such as Pizza, with Pizza Inn.

3/23 Financial Results and Cash Generation

In its latest half-year results, the business showed solid growth, with revenue up 7% and operating profit up 2%.

The real highlight of the results, however, is the net cash generated from operating activities—$23 million, up 51%.

Read 23 tweets

Tinashe Mukogo

@tmukogo

Apr 19

1/9 You May Like German Cars, But You Will Probably Drive A Chinese One

Another Chinese car brand, Changan, is reentering the South African car market. This will bring the number of Chinese car brands available in South Africa to 18 by the end of the year.

That’s a lot, and the Chinese are not stopping. Here is why..🧵

2/9 China was late to start manufacturing cars, with the first locally assembled car, the Dongfeng CA71, not being produced until 1958 (see picture below).

Compare this with Germany, which started in 1885, and Japan, which started around 1907.

But things have now changed..

3/9 After the late start, China has become the world's largest car exporter in the last few years, and the trend isn’t slowing.

Read 9 tweets

Tinashe Mukogo

@tmukogo

Feb 5

This 27-Year-Old Document Was At The Center Of Econet's Historic IPO And Will Teach You About Vision, Building A Team and Being Bold Even As Young Person.

You can read all 46 pages or spend 5 minutes reading the thread below - you won't regret it.

🧵Thread (from the archives)

By December 1997, Econet had finally been awarded a telecom license.

But after a long battle, the company was financially stretched so Strive Masiyiwa and team came up with a crazy idea - raise cash directly from the public through an Initial Public Offering (IPO).

IPOs are usually for established companies with a long track record. At the time, Econet was very much a startup.

They had only started operating in July 1998 but planned to IPO in September - two months later! Even Google, which also launched in 1998, waited for 6 years.

Read 17 tweets

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