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Tinashe Mukogo Profile picture
@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 Image
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. Image
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. Image
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👏🏾 Image
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). Image
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... Image
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, Image
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. Image
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... Image
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. Image
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. Image
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. Image
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👏🏾 Image

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More from @tmukogo

Tinashe Mukogo Profile picture
Dec 5
1/16 Tupperware is bankrupt and closing up shop in South Africa.

What happened?

The business model that made it a success ended up making it a failure.

Here's the cautionary tale of Tupperware's rise and fall that all business leaders and entrepreneurs must know...🧵 Image
2/16 Earl Tupper started Tupperware in 1946, and in its early days, it was sold in hardware and department stores.

However, despite a lot of investment, the business struggled until a single mother from Detroit changed everything. Image
3/16 Brownie Wise had come across Tupperware in a hardware store and, after trying the products, saw the potential.

Brownie had experience with marketing, advertising, and a new sales model of home-based sales demonstrations, which she thought could work for Tupperware. Image
Read 16 tweets
Tinashe Mukogo Profile picture
Nov 28
1/11 In 2012, South Africa’s Murray & Roberts sold its 46% stake in Murray & Roberts Zimbabwe (now Masimba Holdings and Proplastics Limited) to a consortium of mostly local investors.

The stake was sold for R10 million rand, about $1.3 million. Today, it would have been worth over $18 million and worth more than half of Murray & Roberts Group.

Let's unpack!Image
2/11 Typically, when a multinational company with a well-known brand sells its interest or exits, people tend to feel less optimistic about the company that is left behind.

This is understandable, but often, breaking out of a multinational company can have significant benefits for the new standalone company, especially in volatile markets like Zimbabwe, where speed and flexibility are key.

Another example is Deloitte Zimbabwe, now Axcentium, after a management buyout that ended its association with Deloitte Global.

At the time, there were doubts about whether the new firm could retain clients after losing the Deloitte name.

However, not only has Axcentium managed to retain blue-chip clients like Zimplats, which is listed on the Australian Securities Exchange (ASX), but it has also won key clients like Nampak from PWC (which has also now exited Zimbabwe) and Tanganda from EY (which is technically a one-year extension).Image
3/11 What was interesting about Tanganda was that the company dismissed auditors EY because of “differences on certain technical matters regarding the interpretation and implementation of IAS 29 Financial Reporting in Hyperinflationary Economies.”

This implies that EY was rigid, but Axcenitum will be more flexible.Image
Read 11 tweets
Tinashe Mukogo Profile picture
Sep 30
Chinese stocks are currently flying.

If you want to make money on the stock maket you need to understand market sentiment.

Here is a how I lost thousands of dollars on Chinese stocks even when the companies I invested in were fantastic. Image
The last few years, Chinese stocks have taken a beating.

Take Alibaba for example, which once traded at about $300 per share but until recently was worth well under $100. Image
A lot of other stocks have fallen from their heights (think GameStop) but the difference is that companies like Alibaba were not "meme" stocks where the stock price is held up by hype.

These were great companies with solid fundamentals.

Even if you look at the stock ratings for Alibaba , we nearly every analyst has rated it a buy, but the stock price was just not popping.Image
Read 10 tweets
Tinashe Mukogo Profile picture
Sep 10
1/18 To analyse the impact of Starlink on Econet Wireless Zimbabwe (EWZ) we first need a recap of the telecommunications (telco) business model in its simplest form.

Let's unpack this and then later how Starlink comes in.

The telco business model is made up of four key sequential, simultaneous, and repeating cycles.

🏦 Borrow 🛰️ Build 🤳 Sell 🤝 Service.

This is a simplification but let me explain each cycle and then illustrate with MTN.Image
2/18 The first thing telcos need to do is BORROW because telecoms is a capital-intensive business and so self-funding is difficult.

Once you've borrowed, you BUILD (and maintain) the network and infrastructure that people will use (think base stations, etc.).

After that, you SELL people access to the network so they can make calls and use data etc. and with the sales you generate profits.

Then, with those profits, you SERVICE the loans (i.e., pay back the banks) and since you've serviced the loans, you can then BORROW more money, and the cycle repeats.
3/18 🏦 Borrow 🛰️ Build 🤳 Sell 🤝 Service 🔂

As long as all four cycles work well, you can repeat this continuously and make loads of money.

Let's look at MTN's financial statements for a concrete illustration. Image
Read 18 tweets
Tinashe Mukogo Profile picture
Aug 28
1. This is a company you need to watch.

TDW is shaking up Zimbabwe's property industry with millions in USD revenue, over 70% annual growth, and hundreds of homes built.

Let's unpack, the property industry, why TDW is growing so fast and the company's potential and risks.

🧵 Image
2. Troika Design Workshop (TDW) is an architectural design studio that also owns a property development business called Turnbury Property Developers.

The company was founded in 2015 and is run by a team of young professionals with an average age of 33. Image
3. TDW is a private company, but they provided me financial information and insights on their strategy.

Note that this is not a promotional post. I am not being paid anything.

I am covering TDW as part of “The Prelist”. For more info on the Prelist see below 👇.
Read 28 tweets
Tinashe Mukogo Profile picture
Aug 27
1. Truworths filed for corporate rescue last week, meaning the company that made millions just over 10 years ago now can't pay its bills.

There will be many winners and losers.

Let’s unpack the losers, starting with Mega Market - one of the most fascinating companies in Zim. Image
2. If you are in Zimbabwe and don’t know Mega Market, you should pay attention.

It is one of the most interesting private companies in the country.

It is run by 38-year-old entrepreneur Shiraan Ahmed and is based primarily out of Mutare, breaking the conventional Harare bias. Image
3. Its core business is manufacturing and distributing fast-moving consumer goods (think rice, salt, flour), but in recent years, it has kinda also become an Investment Firm.

Yes, the company that trades rice also trades listed stocks.

Mega Market may be a fitting name.
Read 17 tweets

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