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Former NetOne CEO: Innovation In Government Companies Is Punishable

Reward Kangai

A number of Zimbabweans harbour the feeling that people working eagerly in government companies and departments run the risk of being booted out because of that eagerness. Former NetOne CEO Reward Kangai seems to also agree that being innovative whilst working in a government-owned enterprise might not be the of ideas.

Posting directly to Twitter, Reward Kangai spoke on companies having to choose between innovation and cost-cutting. The thread is pretty informative and given that it’s coming from the former CEO of the second largest network provider it does give some perspective as to how some of the decisions made in the past few years were reached. Here is the thread:

Some 10 years ago, Mobile Telecomms operators reached a crossroads, where they had to choose the route of ‘COST CUTTING’ or ‘INNOVATION’. Those that chose the INNOVATION route are reaping handsome dividends. Cost cutting route brought short term benefits but not sustainable.

What gave rise to the point of crossroads are many factors, key among them is the ‘Death of distance’, as reported by the Economist magazine more than 20 years ago, largely brought about by the Internet & Mobile telecomms itself, as the key vehicle for Internet delivery.

The ‘Death of Distance’ meant that distance was no longer a factor in the cost of a call. We all know this as the cost of an overseas call now, is what it costs to access the Internet! This is all courtesy of Voice over the Internet Protocol, VoIP, like WhatsApp, Telegram etc.

At the same time, the infrastructure capital costs needed for Internet service increase, as mobile networks evolve from 2G to 3G,4G, 5G. They have faster speeds but their geographic area of coverage decreases, hence more base stns needed & more capital & operational costs.

Faced with the dichotomy of increased capital & operational costs, whilst revenues were heading south, many mobile operators chose the ‘Cost Cutting’ route, but that’s not sustainable in the long term & is, in fact, a ‘perilous route’, to use the expression Dr W. P. Mangwende

For a State Owned Entity, SOE, the INNOVATION route is noxious to management, given the rigid Gvt controls, bureaucracy, uneven regulatory framework etc. I can confirm that Innovation in an SOE is punishable! So, what then is the way forward for an SOE in the industry?

Gvt needs to get a Strategic Partner for a combined Mobile & Fixed Telco operator. Strategic Partner MUST be a global operator with at least 10 operations in Africa, in order to benefit from economies of scale & scope in equipment purchases & product development.

Finally, Gvt through MoF @MthuliNcube needs to provide an avenue for the ordinary Zimbabwean to also purchase some shareholding in the combined Mobile & Fixed Telco SOE to be privatized & some Employee Share Ownership scheme as that would increase subscription & staff motivation.

Reward Kangai Via Twitter

Whether the punishment Reward Kangai is referring to is his controversial removal as CEO of NetOne or it’s something else is not entirely clear but considering NetOne and Telecel’s track record with innovation, I can’t help but give Mr Kangai some benefit of the doubt.

Considering that there are only 3 operators and the government has shareholding in Telecel and NetOne, it’s not too hard to conclude that the “many mobile network operators” referred to are the ones that are owned by the government.

The (perceived) lack of innovation at these two networks has resulted in both playing catch up to Econet who are far ahead in terms in the telecoms space and also in the mobile money field where they are all competing.

The governments plan to sell part of their stake in NetOne and this could result in some reforms and a culture that fosters innovation even though it doesn’t meet Mr Kangai’s suggestion of employee share ownership and ordinary Zimbos having a stake in the company that formerly employed him.

Quick NetOne, Econet, And Telecel Airtime Recharge

5 thoughts on “Former NetOne CEO: Innovation In Government Companies Is Punishable

  1. Let’s not forget that this Kangai guy was one of the ‘cashberts’
    After the Cuthbert Dube USD half a million monthly salary was exposed. A list of the salaries of the parastatal CEOs was then drafted and published.
    This Kangai guy was number 2 from Cuthbert Dube in unjustified phenomenal high salaries.
    He did a very good job of milking the parastatal not to talk about bringing it down due to mismanagement.
    Of cause being a Government enterprise there were those constraints of rigidness, but this is were innovation craftiness comes into play. He was not innovative enough but perhaps wanted to follow the strategy of Econet who had so much flexibility. He should have found ways of playing in his own kind of space.

    1. That’s a perfect example of what I meant. The State controlled papers tried to scandalize me on so-called Mega Salaries. They deliberately ignored the fact that in 2011, the Board introduced the Total Cost to Company Model, TCCM, which removed provision of Company cars but all expenses previously paid by Co., were to be provided as salary to reflect the true cost of employment. We read elsewhere of a CEO who had 5 cars during the same period when I only had one car, all that to mislead readers and justify their claims of me earning Mega Salary. . Where is the equity? The Herald went on to lie that I chartered a plane to Kenya for my son’s wedding, yet I travelled Economy class on a regular commercial flight.

  2. Parastatals/SOEs are feeding troughs for these CEO guys, their Annointers and other of their ilk!!

  3. Government institutions are not good place for innovators. I have seen great tradesmen, technicians, engineers, technocrates, etc going nowhere in terms of using their God given talents.

    I agree with you Eng Kangai, if government sell part of its stake to employees then the remainder to the citizens of Zimbabwe that’s the first step to innovative ideas.

    We speak of innovation as a country or government but we don’t have an institution/s that nurture creative minds. Even if the government sets such an institution, they select non-innovators as leaders which kills the whole process. If you want best soccer teams choose the best coach, if you want the best mathematics student give him the best mathematician. The great Norwegian mathematician Abel once said I have contributed a lot in mathematics because i learnt a lot from masters not their students. In Zimbabwe we usually learn from students not from masters themselves.

    The Americans have DIPRA they do all kinds of innovations they even conduct competitions and invites everyone around the world to compete. Our government should set up such competitions with high rewards and watch what comes out, the nation will be amazed.

    Government institutions are static we are still using pre-indepedence technology because the the big boss or regulators are comfortable with the old systems, they fear losing their jobs. The other issue is that when you introduce new innovative technology into the system there is likely to be reduction in manpower. Which might not be compactable with government policies-jobs for all.

    The other issue that kills innovation is permanent employment. If government introduces 5 year performance contracts it will ignites innovative minds hence improved country production.

    Look at local councils, we have a 55year old general hand, does it do good to the nation, I will safely say no. That kind of manual labour favours younger generations say less than 30 year olds. This means that an employee will be thinking of the next move before he reaches 30 and by doing so this employee is forced to think outside the box or remove the altogether and became innovative.

    I always argue that Zimbabwe doesn’t need foreign direct investment because we have a lot of Zimbabweans who have a lot of money but there are no companies that they can invest in. ZISCO is a company which government can sell its shares to its citizens, the citizens will always come up with innovative ideas to resuscitate this sleeping gaint.

    I know this model it’s not there in the management books and as I know our peers they are not comfortable with this kind of innovative ideas, they will always say it’s a strategic institution to the country, but it has been sleeping for two decades. What we do as citizens we say how much do we need to resuscitate this plant say one unit, the cost might be US$0.5B. The citizens of Zimbabwe will raise the money though buying of shareholding. With this idea can be spread through out the nation in every sector in the country. There will be no stay away because companies will be for citizens run by citizens.

    Innovation is key to economic development of this country. We have the skills but we don’t have the policies to back up innovation.

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