Business / Companies
Econet mulling a major restructuring exercise
17 May 2015 at 05:52hrs | Views
ECONET Wireless Zimbabwe (EWZ) is believed to be mulling a major restructuring exercise through which a sizable chunk of its workforce will be laid off while some business units will be consolidated in order to contain costs and realign operations, Sunday Mail reported.
Management at the telecommunications company however refuted the claims.
EWZ currently has non-core investments in the financial services sector, insurance, renewable energy, education, bottling, hospitality and payment gateway solutions.
It also has controlling stakes in Steward Bank, Mutare Bottling Company, Liquid telecom, ZOL and Imvelo Safari lodges.
Last week, the company's group chief executive officer Mr Douglas Mboweni said that the company was not aware of such moves.
"I am not aware of the issues you are raising in your story. Your source is misinformed.
"It is not possible for any such initiatives to be implemented without the approval of the Board. I can confirm that the Board has not approved such an exercise," said Mr Mboweni.
Authoritative sources, however, insist that Econet has already identified targeted employees who will be informed in due course.
Most companies are restructuring their operations as they seek to ride out the present economic challenges.
"We are in the process of retrenching most of the non-utility staff within various departments; at the same time consolidating most of our departments because basically, what was taking place was that there was a lot of duplication of roles, within most of the departments, so only the critical staff within the organisation are going to be retained.
"Just look at this, Steward Bank's staff costs at US$5,1 million were 39 percent of total operating expenses in the half year to August 2013, compared to 34 percent in the same period of 2012.
"Steward Bank has already laid off 127 employees, about 40 percent of its workforce, to cut costs.
"The affected employees have already been served with retrenchment letters," said a source who spoke on condition of anonymity, adding that the bank had just over 300 workers prior to the retrenchment.
Steward Bank provides the backbone to Econet's mobile money service, Ecocash, and its various products such as Ecocash Save and Ecocash Loans.
Most of Econet's products - Ecocash, Econet Solar, Econet farmer, EcoSchool and Eco Health - are supported by organisational structures that include a chief executive officer, human resources and financial controllers, a development that analysts maintain is draining the company
Economist Mr Brains Muchemwa believes that EWZ has over the years been run on a bloated structure.
"The oligopolistic nature of the telecoms industry, coupled with the increasing mobile services penetration ratios, has, over the years, created massive revenues and profits for the players.
"The fact that this industry's revenues have matured and the big threat of internet based communication at a time Potraz slashed tariffs has all but shaken the very core of the strong earnings potential of the industry.
"It therefore should become urgent that the sector undertakes massive structural realignment and contain costs to match the actual and anticipated fall in revenues.
"The mentality and acts of exuberance that were part and parcel of the industry, then being buoyed by the super profits, are no longer sustainable.
"It is not surprising therefore that the industry is not only facing a challenge in maintaining historical profitability levels, but is equally troubled by its ability to continuously afford to service its long term huge debts that were accrued during the hey days," said Mr Muchemwa.
Most local mining companies such as Toronto Stock Exchange-listed gold miner New Dawn Mining Corporation and Bindura Nickel Corporation have of late started cost-cutting measures due to declining international metal prices.
Companies that have retrenched include platinum miners Mimosa and Unki, Bindura Nickel, Spar supermarkets, Dairibord, Cairns, Olivine Industries and PG Industries.
A report released by employers body Employment Confederation of Zimbabwe (EMCOZ) in July last year indicates that 1 100 individuals were retrenched in the first half of 2013 and were recorded at the Ministry of Labour and Social Welfare.
Also, according to Zimbabwe National Statistics Agency (Zimstats) Labour Force survey 2014, a total of 227 000 persons were once laid off between June 2011 to may 2014 with males constituting 72 percent and females constituting 28 percent of the retrenched population.
The agriculture, manufacturing, forestry and fishing sectors accounted for the larger proportion of the population retrenched.
"The activity status of the once retrenched persons showed that 80 percent were re-employed, 19 percent were unemployed and one percent were outside the labour force (economically active), read part of the report.
Information from the Retrenchment Board reveals that at least 6 960 workers were retrenched last year, with further job losses expected at nearly 40 companies currently undergoing either judicial management or liquidation.
Management at the telecommunications company however refuted the claims.
EWZ currently has non-core investments in the financial services sector, insurance, renewable energy, education, bottling, hospitality and payment gateway solutions.
It also has controlling stakes in Steward Bank, Mutare Bottling Company, Liquid telecom, ZOL and Imvelo Safari lodges.
Last week, the company's group chief executive officer Mr Douglas Mboweni said that the company was not aware of such moves.
"I am not aware of the issues you are raising in your story. Your source is misinformed.
"It is not possible for any such initiatives to be implemented without the approval of the Board. I can confirm that the Board has not approved such an exercise," said Mr Mboweni.
Authoritative sources, however, insist that Econet has already identified targeted employees who will be informed in due course.
Most companies are restructuring their operations as they seek to ride out the present economic challenges.
"We are in the process of retrenching most of the non-utility staff within various departments; at the same time consolidating most of our departments because basically, what was taking place was that there was a lot of duplication of roles, within most of the departments, so only the critical staff within the organisation are going to be retained.
"Just look at this, Steward Bank's staff costs at US$5,1 million were 39 percent of total operating expenses in the half year to August 2013, compared to 34 percent in the same period of 2012.
"Steward Bank has already laid off 127 employees, about 40 percent of its workforce, to cut costs.
"The affected employees have already been served with retrenchment letters," said a source who spoke on condition of anonymity, adding that the bank had just over 300 workers prior to the retrenchment.
Steward Bank provides the backbone to Econet's mobile money service, Ecocash, and its various products such as Ecocash Save and Ecocash Loans.
Economist Mr Brains Muchemwa believes that EWZ has over the years been run on a bloated structure.
"The oligopolistic nature of the telecoms industry, coupled with the increasing mobile services penetration ratios, has, over the years, created massive revenues and profits for the players.
"The fact that this industry's revenues have matured and the big threat of internet based communication at a time Potraz slashed tariffs has all but shaken the very core of the strong earnings potential of the industry.
"It therefore should become urgent that the sector undertakes massive structural realignment and contain costs to match the actual and anticipated fall in revenues.
"The mentality and acts of exuberance that were part and parcel of the industry, then being buoyed by the super profits, are no longer sustainable.
"It is not surprising therefore that the industry is not only facing a challenge in maintaining historical profitability levels, but is equally troubled by its ability to continuously afford to service its long term huge debts that were accrued during the hey days," said Mr Muchemwa.
Most local mining companies such as Toronto Stock Exchange-listed gold miner New Dawn Mining Corporation and Bindura Nickel Corporation have of late started cost-cutting measures due to declining international metal prices.
Companies that have retrenched include platinum miners Mimosa and Unki, Bindura Nickel, Spar supermarkets, Dairibord, Cairns, Olivine Industries and PG Industries.
A report released by employers body Employment Confederation of Zimbabwe (EMCOZ) in July last year indicates that 1 100 individuals were retrenched in the first half of 2013 and were recorded at the Ministry of Labour and Social Welfare.
Also, according to Zimbabwe National Statistics Agency (Zimstats) Labour Force survey 2014, a total of 227 000 persons were once laid off between June 2011 to may 2014 with males constituting 72 percent and females constituting 28 percent of the retrenched population.
The agriculture, manufacturing, forestry and fishing sectors accounted for the larger proportion of the population retrenched.
"The activity status of the once retrenched persons showed that 80 percent were re-employed, 19 percent were unemployed and one percent were outside the labour force (economically active), read part of the report.
Information from the Retrenchment Board reveals that at least 6 960 workers were retrenched last year, with further job losses expected at nearly 40 companies currently undergoing either judicial management or liquidation.
Source - sundaymail
