Contracts are sacred: Nyaradzo CEO

Source: Contracts are sacred: Nyaradzo CEO – DailyNews Live

Business Writer      10 September 2019

NYARADZO Group Chief Executive Officer (CEO) Mr Philip Mataranyika is
of the firm conviction that contracts, whether verbal or written, are
sacred in any field.

He makes the point that despite the harsh economic environment which is
adversely impacting the business, Nyaradzo customers have their word. In
this Question and Answer, he responds to some of the topical issues
relating to their business.

Q: You last gave an interview in April this year. In that question and
answer, apart from reminiscing about Nyaradzo’s 18th anniversary, you
hinted to an adjustment in premiums around June/July. Was this an idled

A: It wasn’t a threat; I was just being realistic. I am sure if you have
been following developments within our industry, you might have noticed
that this has since come to pass.

Effective 1 June, 2019 our premiums went up by 100% which – by the way –
was a managed increase and far below the actual cost of providing the
service which, at the time, had gone up by more than 5300% due to a wave
of price hikes experienced in the months preceding the adjustment.

It is, however, important to point out that in order to continue offering
the same standard of a quality service, premium adjustments became

Q: By not increasing premiums in June by margins that matched the increase
in costs incurred by the business, were you not in breach of your
fiduciary responsibility to your shareholders?

A: Not at all. Our fiduciary responsibility is not confined to
shareholders alone; it extends to communities within which we operate and
our customers, without whom we would not have a business to talk about. It
would have been irresponsible on our part – as an organisation – to pass
the full cost to our clients without sharing the burden with them through
absorbing some of the costs and seeking out innovative ways to improve our
operational efficiencies. We have the full support of our shareholders on

Q: After the 1 June, 2019 premium increase, I take it that we should not
expect any further adjustment in the foreseeable future?

A: I would be lying to you if I am to make such an impractical undertaking
in this hyperinflationary environment. A lot has changed since June 2019,
when we effected the premiums increase, petrol and diesel were retailing
at Z$4.97 and Z$4.89 respectively. Fast-forward to today, the cost is now
Z$9.86 and Z$10.25 respectively.

Given the size of our fleet of buses, hearses and other service vehicles,
the burden on the business is obviously heavy. The cost of electricity has
also gone up, with tariffs for businesses such as ours, which are
classified as non-exporters increasing from an average of ZWL$ 9.86 cents
kilowatt per hour (kWh) to Z$WL 45 cents/kWh.

The continued increase in the Z$ interbank rate has also meant that the
cost at which we access foreign currency to import spares, chemicals and
other consumables has spiked, putting increased pressure on the business.

Add the increase in the cost of utilities and salaries as determined by
the National Employment Council for the Funeral Industry, one can get a
clearer picture of the impact on the industry.

Q: Aah, this sounds scary; so where to from here?

A: We are in constant communication with our stakeholders, especially our
valued customers, to bring them up to speed with these and other
developments. From our discussions with them, another premium increase is
unavoidable – maybe around September or October.

Consistent with our values, we will share the burden with our clients as
we strive to strike a balance between affordability and accessibility of
our services.

Q: At the rate that premiums are going up, don’t you foresee a situation
whereby the industry might price itself out of the market?

A: Not at all. If you do the math, the benefits of having a policy far
outweigh the cost. The cheapest way to access funeral services is through
getting a policy as it is unaffordable to meet the cost of funeral
services on a cash basis, particularly in this hyperinflationary

Besides, ours is not a luxury service that people can afford to do
without. Despite it being of necessity, we have been extremely responsible
and sensitive in our pricing as an industry so that we carry along with us
everyone who has been on our books.

Q: Let me cut you short. The period 2007 and 2008 saw many insurers going
back on their word. I thought I should say!

A: The period you’re referring to was a traumatic one for policyholders
who lost everything they had invested in. I am happy to say that we were
the odd ones out who were able to honour the promises we made to our
customers. Our commitment remains: Contracts, whether written or verbal,
are sacred…they must be honoured.

Q: Even when they undermine the interests of the business?

A: Why make a promise that you cannot keep especially when you have
competent actuaries whose responsibility is to assess risks and help
businesses develop policies that minimise the cost of that risk? Like I
have said before, businesses exist for the long haul and can afford to
limp along in difficult times, for as long as they can avoid going under.

On the other hand, a loss to an individual is real and final while that to
an organisation or company, real or imagined, can be recovered with time.
For this reason, even as we shall be reviewing our premiums, the margin
will not reflect the full extent of the cost impact we are incurring so as
to achieve a balanced outcome, whereby the quality of service will be
maintained without overburdening both the business and the client.

Q: Will I be correct to suggest that this is a period of arrested
development, whereby we should not expect any growth at all from Nyaradzo?

A: Far from it. It would be suicidal for us to fold our hands in the face
of approaching danger, wishing away the tragedy. In times like these,
businesses need to develop new income streams and diversify into other
areas in order to mitigate risk.

This is the route that we have taken at Nyaradzo on top of pursuing other
survival strategies, among them cost containment and improving operational

Q: Any specifics as to what Nyaradzo has done in that regard?

A:  For now, all I can say is that our business has reached the stage
whereby it is ready to explore regional and international opportunities.

The growth we have achieved over the past 18 years has also created
upstream and downstream opportunities that have not escaped our attention.
In previous interviews that I granted, I recall citing our inability to
export our services to more countries as something that I regret. Not
anymore. *Why don’t we make a date for another discussion in the not so
distant future?*

Q: The South African unit in Strydom Park, Randburg will be celebrating
its second anniversary in December this year, having opened its door on
the 1st of December 2017. Are you happy with its progression?

A: *We couldn’t be happier with the work that Webster Chikengezha and his
team are doing in Johannesburg* , ensuring that our business there gains

The response from *fellow* Zimbabweans in South Africa *as well as our*
brothers and sisters in the rainbow nation has been very encouraging.

Q: What does the future hold for Nyaradzo?

A: Despite the enormity of the challenges that the industry is going
through, the future still looks bright. These challenges, in my view, are
transient in nature and *soon we shall be talking about them in past tense

Q: Your parting words?

A: Behind every dark cloud is a silver lining. As we are going through
this rough period, let us not despair. We need to be innovative so that we
can find solutions to many of the challenges confronting our motherland.

John Kennedy once said `ask not what your country can do for you – ask
what you can do for your country’. John Kennedy’s advice is relevant to
each and every one of our citizens.