Air Zimbabwe's institutional problems, painfully on public display

Sep 15, 2011

There may be only a tiny percentage of Zimbabweans who have any chance of being passengers of Air Zimbabwe, but surely all would want it do well. It carries the country's name, which once brought pride to all when it was doing well, and causes every Zimbabwean shame when it is floundering the way it is doing. Its biggest, most obvious problems are well known. Two brief articles in the state media unwittingly bring to light many of the other not so obvious problems that sadly plague Air Zimbabwe.

On September 14 the ZBC website had the article ''Air Zim board given lifeline.'' It was about how the ministry of transport had extended the tenure of the airline's board of directors for another six months from its expiry on August 7.

Air Zimbabwe may be government-owned, but it is supposed to be a commercial airline. Just the fact that its board has to be appointed by a government ministry is in this day and age way out of line with business practice, especially for a company that is in desperate need of a turn-around strategy. There are models for how a company can be government-owned without necessarily being government-strangled, although it is admittedly hard to conceive them working in a Zimbabwe in which government wants to micromanage everything.

The airline may be in dire need of capital, but perhaps even more importantly, and in order to be able to attract that capital, it is in sore need of fresh, independent, non-political thinking, strategies and voices. That does not seem possible under the present scenario.

On what basis do the current board members hold their positions? Is it primarily airline or even general business expertise, or is it instead closeness to the ruling authority? This might not matter much in normal times, but this is a time of crisis for Air Zimbabwe, and it needs the very best airline and business expertise it can get, on its board and in its management. The more politically independent voices the better, since the intrusion of politics does play a role in the company's problems going back many years. And yet there is no chance of board political independence when that board's tenure is determined by a government department. One wonders about the competence of the government department itself to appoint the best board needed for this critical period in the life (or near death) of the airline.

We have a situation where the board, which would ideally be playing its role in independently making the best commercial recommendations for the airline, must fearfully look over its political shoulder. The board-appointing authority at the relevant ministry must in turn fearfully look over its own political shoulder in the names it puts forward for the board. Just at this level of complicated, highly-politicized governance, the struggling airline is in deep trouble.

Asked to confirm the extenstion of the term of the board he heads, chairman Jonathan Kadzura, ''refused to comment on the development, referring the news crew to the responsible minister.'' While he has previously often oddly spoken where one would expect the chief executive of the airline to do so, one would have expected him to have no trouble to simply confirm or refute the story that his board's tenure had been extended. What would be the harm of ''yes'' or ''no?''

Referring the journalist to the minister on such a basic, simple issue only deepened the impression of a board that is in deep fear of the ministry. If the board chairman is as fearful of the minister over this simple issue as his new media-shyness made it appear, are he and his board going to be bold and independent enough to speak their minds over much more serious issues plaguing the airline?

The other story that unintentionally revealed the airline's plodding, complicated, top-heavy and politicized chain of command was in the Herald of September 15. ''AirZim fails to resume flights'' was about the now long-running (since July), deeply embarrassing staff strike that has grounded the airline.

"The plan was to resume flights tyesterday, but this arrangement has not been realised because we failed to access the amount that we require to enable us to resume flights. We were hoping that bankers who were working with our parent ministry would have released the money so that the flights can resume," acting chief executive Innocent Mavhunga was quoted as lamenting.

Air Zimbabwe is not the first business to be turned down by financiers for one reason or another, and it won't be the last. All businesses encounter this experience at one time or another. Unfortunatey for Air Zimbabwe, many of the reasons that make financiers avoid it like the plague are public knowledge.

However, what jumped out of Mavhunga's statement as an anomaly was the clear suggestion that it was not  the chief executive and his management team that were talking to bankers, but 'our parent ministry!' If this is the situation, then Mavhunga and his team are effectively reduced to being like little kids who are anxiously waiting to see if mummy will come back from work with the sweets they requested in the morning.

Mavhunga and his managers may have the titles, but appear not to have much of the actual powers that should go with them, of which negotiating with potential financiers should be at the top.

Who knows more about the needs of the airline, the management or 'the parent ministry?' If a banker had a detailed question about the submitted application for funds, would 'the parent ministry' they are negotiating with be able to answer? Would you as a potential financier be satisfied or comfortable with a situation in which the team approaching you for funds is composed of ministry bureaucrats, rather than the airline's management? Is it not the day to day operational competence of the airline's management, rather than the parent ministry, that will determine whether you as the financier is satisfied that it is safe to give the loan; that you are reasonably confident that the people you are giving the bank's money to know their job?

If it is ministry officials fronting something basic and everyday to a business like negotiations with banks, how can the banks be sure those same officials will not also have the power to negatively interfere with airline operations? If these ministry officials are so senior to company management even with regards to finance issues, could they not over-rule management on other issues that should only be decided by management? Who is really ''in charge'' at the airline; professional management or 'parent ministry' bureaucrats?

Even if the 'parent ministry' were guaranteeing the loan, you would still expect that it would be the airline's management that would be at the forefront of discussions with bankers.

Besides all this, should the airline not be allowed to grow out of close supervision by the 'parent' ministry? When is Air Zimbabwe going to be allowed to grow out of adolescence and to become an adult that is free of its 'parent?'

If the ministry is the 'parent' and the airline's management is the child, what is the board? How are three-way disagreements between the three resolved? 

This convoluted governance structure and the difficult questions it raises might be common to all government-owned companies and somehow work most of the time, no matter how poorly. The issues are, however, more urgent and different because of Air Zimbabwe's prominence, and because of how it is experiencing its pitiful, painful death throes in full view of the entire world.   

With this messy way of superintending a company in place, it might not matter how much new credit or how many new planes Air Zimbabwe acquires. From the ground up to the very top, it looks like the company needs to completely change its corporate culture to have any hope of being a viable business entity again.

Sadly, Air Zimbabwe may be in even worse trouble than it appears. None of the interest groups who should be at the forefront of turning it around, and who oddly have the most to benefit from it, are giving it any chance to become a proper, competitive business.

The Zimbabwe Review


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