Online 29 2014 Membership Market Study Report

ZIMBISABMO MEMBERSHIP MARKET STUDY

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Prepared By


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CONTENTS

ACRONYMS

LIST OF FIGURES

EXECUTIVE SUMMARY

1. INTRODUCTION1.1 Background And Objective Of The Study

2. FINDINGS2.1 Findings From The Quantitative and Qualitative Research

ANNEX SECTIONA. The Limitations Of The Methodology And SampleB. About Business Membership Organizations In ZimbabweC. Bibliography

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2020

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ACRONYMS

ADMA Advertising Media Association

BAZ Bankers Association of Zimbabwe

BMO Business Membership Organisation

CIFOZ Construction Industry Federation of Zimbabwe

CoMZ Chamber of Mines Zimbabwe

CZI Confederation of Zimbabwe Industries

ESAP Economic Structural Adjustment Programme

GDP Gross Domestic Product

GPA Global Political Agreement (Zimbabwe)

MAIZ Motor Industry Association of Zimbabwe

MAZ Markers Association of Zimbabwe

MTP Mid Term Plan 2010 - 2015

(Government of Zimbabwe)

NGO Non-Governmental Organisation

PPD Public-Private sector Dialogue

SME Small and Medium Enterprise

STERP Short Term Emergency Recovery Program

ZIMASSET Zimbabwe Agenda for

Sustainable Economic Transformation

ZNCC Zimbabwe National Chamber of Commerce


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Emerging membership models

Services are not readily available for a number of BMO services including several that are important to the private sector: i) facilitating access to finance, ii) facilitating new business, trade delegations, promoting local procurement, iii) monitoring legislation and regulations affecting industry.

On average, companies surveyed received some form of the listed services from BMOs 4.6 times per year.

BMO performance on service delivery is generally rated as fair, but i) facilitating new business trade delegations and promoting local procurement, ii) facilitating access to finance, and iii) conducting research and providing policy analysis are perceived as being least well performed.

Generally, both members and non-members rate all BMO services as important, but especially important are i) access to finance, ii) facilitating new business, and iii) monitoring the legislative and regulatory environment.

The perceived value of three BMO services were perceived to be of much greater value than other services, namely: i) facilitating new business,ii) facilitating access to finance, and iii) PPD platforms, lobbying government for polices and services.

The average perceived fair price for BMO services MO services were perceived to be of much greater value than other services, namely: i) facilitating new business and

Figure 1.1.1

Figure 2.1.1

Figure 2.1.2

Figure 2.1.3

Figure 2.1.4

Figure 2.1.5

Figure 2.1.6

LIST OF FIGURES & TABLES


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ii) facilitating access to finance, iii) PPD platforms, lobbying government for polices and services, and iv) organising conferences, workshops, seminars and networking opportunities.

The cost to value ratio analysis indicates that five services have higher ratios than other services: PPD platform, lobbying government for polices and services; professional development, training, workshops, etc; facilitating new business; monitoring legislation and policy information that affect industry; market and industry specific information.

Whilst most companies who are members feel they get fair value for money for BMO services, there is much room for improvement.

Respondents found the Customised and International BMO membership models most attractive.

Companies prefer that BMOs use electronic media and face-to-face company visits to reach out to them.

Average annual membership fees are low, with fees averaging about $200-$375 per annum or $17- $31 per month.

Figure 2.1.7

Figure 2.1.8

Figure 2.1.9

Figure 2.1.10

Table 2.1.1

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EXECUTIVE SUMMARY

OF CURRENTBMO MEMBERS

WOULDRECOMMENDJOINING ABMO

77%

The results of the study are intended to enable BMOs to understand who is most likely to buy their products and why, the gaps in service delivery and the opportunities these offer to BMOs. The study was done using qualitative (desk research and 11 interviews with stakeholders) and quantitative methods (interviews with 417 businesses).

The context in which BMOs in Zimbabwe operate is difficult because the economic environment is negatively affecting the viability of member businesses and those that are operating struggle to pay member fees. This is making it more difficult to attract members and is increasing competition amongst BMOs for members. In this environment, there is increasing pressure for BMOs to adapt to the current needs of business and deliver services that members value.

Most of those interviewed had never been a BMO member. Former BMO members tend to have been longer term members in the past, with a track record of commitment to their BMOs. The main reasons for discontinuing members were ‘financial constraints’, ‘no visible benefits’ and ‘no clear accountability in the BMO’.

Past Members

Current BMO Members

Non-Members


The current business sector is seeing the emergence of a new generation of entrepreneurs whose way of doing business differs significantly from the older generation. They presently do not find much to attract them to become members of BMOs. This presents significant challenges to BMOs to offer services that are relevant and add value if they are to attract new members.

Some perceptions about BMOs are positive, but there are also many negative perceptions which are undermining their efforts to attract new members and retain existing members. Negative associations are related to corruption and ineffectiveness. These issues need to be addressed if BMOs are to attract and retain members.

Many respondents did not have any associations about BMOs at all and this suggests that there could be opportunities for BMOsto communicate to potential members who are open to being persuaded. BMOs need to work hard to offer relevant services that meet the needs of potential members if they are to attract new members and advertise their services. Non-members said that they would be motivated by the following services to join a BMO: advocacy, research and policy making and supplying

FEMALEBUSINESS OWNERSOFTEN SHOWLONG-TERMCOMMITMENTTO THEIRBMOs.

196

103

111

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COMMON CHALLENGES FOR BMOs• Viability of member businesses.

• Accountability and internal governance.

• Meeting the needs of informal sector and female headed businesses.

• Low visibility and public awareness of BMO services.

• Ineffective communication with members and negative perception.

businesses with information. The main reasons that members were motivated to maintain their membership were situations where membership is mandatory, attractive services and to enhance their credibility as a market player.

More than three quarters of members said that they would recommend and encourage other companies to become BMO members. However, a quarter of members said that they would not recommend or encourage others to join because they thought BMOs are ineffective and offered little or no relevant services or benefits.

Some BMO services are not readily available to members, including:

1 Facilitating access to finance.2 Educating as well as engaging the media on key sector issues.3 Facilitating new business, trade delegations, promoting local procurement, and conducting research and providing policy analysis. Two of these areas, facilitating access to finance, facilitating new business, trade delegations, promoting local procurement, are also rated as important.

This indicates market gaps in BMO services and offers opportunities for BMOs to meet the unmet demand for services,

THE MOSTVALUEDSERVICES ARE OFTEN

POORLYPERFORMED

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68%MEMBERS WHO WANTA CUSTOMIZEDMEMBERSHIP MODELBASED ON SERVICES

PROVIDEDRATHER THANCOMPANY SIZE.

especially in areas that are rated important (access to finance, facilitating new business, advocacy and lobbying government including public-private dialogue (PPD), accessing policy makers, etc. On the whole BMO performance of services is satisfactory, although there is much scope for improvement. The results indicate that those who are more familiar with BMO services tend to rate the services as more important, and suggest an opportunity for BMOs to attract new members through making them more aware of the value of their services.

The findings also show that although members place importance of some BMO services, such as facilitating finance, access to new business, monitoring legislation and regulations, these services are often poorly performed. This suggests opportunities for BMOs to develop competitive advantage to gain new membership market share, especially in services that are rated highly important.

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The findings indicate that both members and non-members value the importance of all BMO services, but these are especially important:• access to finance, • facilitating new business and • monitoring the legislative and regulatory environment are

especially important.

The value to cost analysis suggests that there is much scope for customising membership fees and charging a premium for services rated as highly important and valuable. However, whilst most companies who are members feel they get fair value for money for BMO services, there is room to enhance perceptions of value for money amongst members through providing results and benefits that are meaningful and tangible to members.

Average annual membership fees are low, with fees averaging about $200-$375 per annum or $17-$31 per month.

However, the cost to value ratio analysis indicates that there are substantial opportunity gaps to increase fees for services with high cost to value ratios. Aware of this, BMOs can explore customising their membership pricing structure according to the value that members place on different services and their willingness to pay for these services. The BMO membership models that are most attractive are the Customised and International models indicating that companies want membership models which are customised to their needs and which create access to people worldwide. In terms of communication, companies want BMOs to connect with them using email, company visits and the Internet.

MAIN REASONS FOR DISCONTINUING MEMBERSHIP• Financial constraints.• No visible benefits.• No clear accountability in the BMO.


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MEMBERS & NON-MEMBERS VALUE THE FOLLOWING• Access to finance.• Facilitating new business.• Monitoring the legislative and regulatory environment.

$200 -$375PER ANNUM

AVERAGE ANNUAL MEMBERSHIP FEES

$17 -$31

PER MONTH

AVERAGE MONTHLYMEMBERSHIP FEES

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The BMOs need to revisit their membership models and customise them to member needs and to allow members to pay only for the services they want, rather than paying higher fees for services that they may not value much.

The need for BMOs to revisit their service offerings and match these with the current needs of businesses. This seems to be especially in the areas of access to finance, facilitating new business, monitoring legislation that affects industry, enhancing competitive capacity amongst members, protecting member interests and effective representation of member needs to Government.

Harnessing the opportunities for membership offered by the new generation of entrepreneurs is going to be challenging, but it is essential that BMOs find ways to offer relevant value to this emerging sector.

BMOs need to address member accountability and strengthen internal governance processes and communication with members. BMOs need to address the issues affecting negative perceptions and build on positive associations. Enhancing governance and member accountability is key to this, as well as using advertising and peers to encourage positive images and encourage membership.

There are opportunities for BMOs to attract new members through making them more aware of the value of their services by being more visible around activities that add value to members,

BMOs need to address member accountability, strengthen governance processes and communication with members.

SOME STRATEGIES THAT BMOs SHOULD CONSIDER

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The gap in service availability indicates that there are opportunities for BMOs to extend services to untapped markets, especially in services rated high important, e.g. access to finance and facilitating new business. Some BMOs focus on larger companies and do not offer relevant services to smaller companies or the informal businesses in their sector. This presents a strategic choice for BMOs: either to develop the market for larger corporate members and specialise in these types of members, or diversify and offer a package of services for smaller and informal sector businesses.

Find ways to make membership compulsory whilst also ensuring that services are relevant to member needs.

There are opportunities for BMOs to develop competitive advantage to gain new membership market share, especially in services that are rated highly important (access to finance, facilitating new business, monitoring the legislative and regulatory environment) and which are not being well performed (conducting research and providing policy analysis, facilitating new business, trade delegations, promoting local procurement, and monitoring legislation and regulations that affect industry).

BMOs can explore customising their membership pricing structures according to the value that members place on different services and their willingness to pay for these services. The report finds that there is likely to be significant scope for increasing the price of some services for which members are prepared to pay premium prices.

Find ways to make membership compulsory whilst also ensuring that services are relevant to member needs.

NON-MEMBERS AREMOTIVATED BY:

ADVOCACY,RESEARCH &POLICY MAKINGAND SUPPLYINGBUSINESSES WITHINFORMATION.

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INTRODUCTION

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INTRODUCTION

1.1 BACKGROUND AND OBJECTIVE OF STUDY

1.1.1 The Study

BMOs are best placed to represent the private sector and articulate their needs. Although the environment in which they operate has changed considerably over the last 40 years, many BMOs have not adapted to the changes in the Zimbabwean and world economies, changes in technology and what this means to previous ways of organising, the new business culture, changing demographics, emerging social values, the effects of economic decline on members priorities and ability to pay for services, etc. BMOs have lost their competitive edge and run the risk of extinction if they do not adapt.

This study analyses the market for BMO Membership by determining the needs of businesses and identifying the profile of the emerging new generation of entrepreneurs, highlighting their needs and values and assessing their willingness to meet their needs through BMO membership. The results of the research are intended to enable BMOs to understand who is most likely to buy their products and why, the gaps in service delivery and the opportunities these offer to BMOs.

The specific objectives of the study are:

• To come up with a detailed profile of the emerging generation of entrepreneurs.

• To explore the current market trends of membership organizations.

• To explore the needs and values of entrepreneurs.


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• To assess the entrepreneurs willingness/predisposition of satisfying their values through BMO membership.

• To gain insight into the different aspects of the sector looking specifically at the following: a) Who is most likely to buy their products and why? b) Paths on how BMOs can reach their customers (members). c) What determines their pricing policy? d) An analysis of the demographic changes looking at age, gender, sector of business and company size.

• To determine member’s perception on the value of membership offered by key Zimbabwean BMOs and to benchmark it to the measured market need.

• To measure the appropriate pricing mechanism for membership services by exploring their interest of members or potential members to join an association on the basis of different pricing structures.

• To identify gaps in the delivery system.

• Propose recommendations or strategies that will help towards the achievement of acceptable membership satisfaction levels.

This study is required to:1 Provide an analysis of the current market trends for membership organisations, including an analysis of the demographic changes, including age, gender, sector of business, and company size, changes in needs and values of potential new entrepreneurs. 2 Profile the value for membership offered by the key Zimbabwean BMOs and benchmark it to the measured market needs. This should be achieved by asking the current members of key associations to define how being a member makes a difference in their lives.3 Understand value for money and help define the appropriate pricing mechanisms for membership services, by exploring the appetite/interest of members and potential members to join an association on the basis of different pricing structures. An example of possible pricing structures to be explored is provided below.


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CUSTOMIZED Members custom build their membership packages to suit their interests and moods.

Members analyze how they want to use their membership, and this leads to higher engagement.

Associations must conduct substantial membership research and allow time to transition all current members.

Membership is restricted to web-based resources and programming.

Memberships provide limited access so they cost less and therefore generate less revenue.

ELECTRONICNew streams of revenue are added without incurring expenses (eg. mailing and printing).

Membership is accessible to people worldwide.

Programming and benefits may need to be developed; engagement more difficult.

INTERNATIONAL Membership expands into new markets and regions, supports globalization efforts.

Menu of membership options based on interests, professional designation, budget.

Requires the ability to manage multiple benefits for multiple audiences.

MULTI-TIER Members like being able to choose which options best suit their needs.

Membership does not require the payment of dues.

People perceive there’s no value because there’s no cost to join.

OPEN Leads to substantial membership growth.

SYNOPSIS THE PROS THE CONS

Figure 1.1.1

Source: Sarah L. Sladek , ‘The End of Membership As we Know It’ page 95

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2. FINDINGS

2.1 FINDINGS FROM THE QUANTITATIVE AND QUALITATIVE RESEARCH

The economic and business contexts and implications for BMOs

The findings indicate that 76% of respondents think that the change in the economy has been strongly negative, or moderately negative in the past five years. Seventy nine per cent thought that the changes had a strongly negative or moderately negative impact on their sector. Sectors which more often reported negative impacts included tourism, engineering and the informal sector. Construction respondents, on the other hand, reported positive impacts in the sector.

Many respondents said that BMOs were not meeting their needs or supporting them. The most often mentioned needs that are not being met through BMOs include:• access to finance• protection from competition• effective representation to Government and,• lack of help to the sector in times of trouble.

Eighty four per cent of respondents said that the approach to doing business used by the new generation of entrepreneurs differs from the way in which the older generation do business. They are seen to be more profit oriented and more concerned about gaining social status, and their values suggest a ‘maverick’ approach to business. Women respondents particularly mentioned their profit orientation and social status characteristics.

2.1.1


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This suggests that former BMO members, especially women, have not been ‘short stay’ members in the past, and have a track record of commitment to their BMOs. The main reasons for discontinuing members were ‘financial constraints’ (42%), ‘no visible benefits’ (40%) and ‘no clear accountability in the BMO’ (25%). Women more often mentioned ‘no visible benefits’ and ‘financial constraints’ compared to male respondents.

Interviews conducted confirmed that the economy is having a negative impact on membership for most BMOs, although there were some sectors that were the exception, e.g. agricultural sector BMO. Others reported drops of 80% in the last 10 years.

These findings have a number of implications for BMOs. It is clear that the troubled economy is having significant impacts on almost all sectors and money to pay subscriptions is very limited. This is making it more difficult for BMOs to attract members, and is leading to greater competition amongst BMOs. This suggests that BMO need to revisit their membership models and customise them to member needs and to allow members to pay only for the services they want, rather than paying higher fees for services that they may not value much.

The significant economic changes impacts on sectors mean that businesses are operating in a very different environment to the one they used to operate in. In addition, many non-members discontinued their BMO membership due to little perceived value. These findings both indicate that there is need for BMOs to revisit their service offerings and match these with the current needs of businesses. This seems to be especially in the areas of access to finance, enhancing competitive capacity amongst members and protecting members from unfair competitive practices and effective representation of member needs to Government. The accountability issue mentioned above also indicates that BMOs need to strengthen internal governance processes and communication with members.

Perceptions about BMOs

Perceptions about BMOs generally, and specifically about the BMOs members belong to, were a mix of positive and negative

2.1.2


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perceptions. Positive associations were mainly around ‘unity/group representation to further interests’, ‘help/support/protection’ (particularly amongst female respondents), ‘sharing/networking/coming together’.

Negative associations were largely related to ‘corruption, theft and profiting at the expense of members’. Other negative associations were ‘ineffectiveness’.

Other frequent associations were related to bigger companies, subscriptions, or no associations.

There were also many mentions of ‘no associations’, which suggests that there could be a sizable number of businesses that are open to forming an opinion about BMOs.

The top three criteria most often associated with a successful BMO are:

• It meets the needs of members,• It is active, effective and well governed, and• It represents members’ needs.

Other associations are: -

• Good communication and meeting with members,• Provides information, and• Large membership.

Zimbabwean BMOs which were cited as successful by respondents include:

Confederation Of Zimbabwe Industries (CZI) Its strengths include: communication on business matters, members and media coverage, lobbies for and represents practical member issues, training programmes, leadership, research, long established,


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professionally run, large membership.

Bankers Association of Zimbabwe (BAZ) Its strengths include: visibility, provides information, professionally run and well organised, positively influenced diversification of banking services, meets member needs, leadership, has effective representation from all levels in the sector, provide networking opportunities.

Marketers Association of Zimbabwe (MAZ) Its strengths include: well organised, regular training, leadership, actively lobbies, active in legislation regulation, communicates with members, have members interests at heart/meet member’s needs, gets involved in practical issues affecting members.

The common characteristics of the above include:

• Visibility: Good communication, media coverage.

• Meets member needs: Gets practically involved, lobbies

• Well run: Leadership, professional, genuine repetitiveness of sector

• Offers relevant services: Training, research, information, creates networking opportunities.

Responses relating to perceptions about un-served or under-served business included:


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• Sole traders, micro businesses• Manufacturing sector• Commercial sector• Informal sector.

These findings suggest that BMOs need to address issues affecting negative associations with BMOs and build on positive associations. Addressing governance issues is clearly important to address in this regard as one of the main negative perceptions is around corruption and misuse of member funds. There is also scope to shape potential member associations, and thereby encourage membership, through advertising.

The findings also point the way in terms of strategic focus: BMOs that meet member needs, which are visible, which are active, effective and well governed are more likely to be successful. There are also opportunities for BMOs to explore new member markets amongst sole traders and micro-businesses, and the manufacturing, commercial and informal sectors.

2.1.3 Supply and demand for BMO services

Non-membersSixty five per cent of non-members said that they had never been a member of any BMO, mostly in the informal sector, manufacturing and commerce. Engineering also scored highly. This could be a true reflection of the engineering sector’s BMO membership, but the small sample number for this sector may skew the results. Of the non-members, sole traders and micro businesses are least likely to have been members.

Of the 107 non-members who had previously been affiliated with a BMO in the past, most had been previously affiliated with Zimbabwe National Chamber of Commerce (28%) (mostly male respondents), Confederation of Zimbabwe Industries (14%) (mostly female respondents), Motor Industry Association of Zimbabwe (8%), Construction Industry Federation of Zimbabwe (5%), Bankers Association of Zimbabwe (2%). This could suggest that these BMOs are more at risk of losing members.


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Forty seven per cent of non-members who had previously been affiliated with a BMO said that they had belonged for 2-5 years, whilst 22% said that they had been affiliated for 5-10 years. This means that former members were typically longer-term members rather than new members.

Non-members said that they would be motivated by the following services to join a BMO: advocacy, research and policy making and supplying businesses with information. Women respondents more often mentioned advocacy and opportunities for networking (e.g. conferences, workshops and seminars) in this regard. The most often mentioned BMOs that they would consider joining are: none (24%), Confederation of Zimbabwe Industries (9%), Zimbabwe National Chamber of Commerce (6%), don’t know/not sure (6%). This could suggest that BMOs need to work hard to offer relevant services that meet the needs of potential members if they are to attract new members and advertise their services.

MembersTwenty-six per cent of current BMO members said that they had belonged for 2-5 years, whilst 60% said that they had been affiliated for 5-10 years. This means that members are also typically longer-term rather than new members, and could suggest few new members joining.


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The main reasons that members said had motivated their membership were: it is mandatory to belong (30%), attractive services (29%) and to enhance their credibility as a market player (6%). Almost 77% of members said that they would recommend and encourage other companies to become BMO members. Slightly more female respondents (16%) said they would recommend and encourage others compared to male respondents (13%). The main reasons for this include: the BMO offers relevant services, governance (i.e. mandatory in the sector or the enhanced reputational creditability in being associated with a BMO), the BMOs performance, effective representation of sector issues. However, 23% of members said that they would not recommend or encourage others to join; the main reasons being: the BMO is ineffective, and the BMO are offering little or no relevant services or benefits.

The main reasons for members becoming a member of a BMO were: ‘compulsory by law’ and ‘through a peer.’Eighty three per cent of BMO members said that there was a 75%-100% chance that they would renew their membership next year. Micro and small sized businesses showed lower chances of renewal, possibly because they are least able to absorb business downturns. All sole traders interviewed said that they would renew their membership and this may indicate that they are members of professional bodies which are mandatory to belong to if they are to operate.

Generally, BMOs were seen to be serving all members. However there were some instances where specific groups were identified as being better served – e.g. big companies, companies run by BMO leadership, parastatals and Government owned companies, etc. Also mentioned were the companies run by BMO staff rather than members. Regarding members who are being served least, generally, BMOs were seen to be serving all members. However, some groups were identified as being not served or under-served – e.g. ordinary members, smaller businesses, those not registered with BMO, informal sector, new generation businesses, indigenous businesses as they do not subscribe to BMO.

Some BMO services are not readily available to members, including: 1 Facilitating access to finance,

2 Educating and engaging the media on key sector issues,


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3 Facilitating new business, trade delegations, promoting local procurement, and

4 Conducting research and providing policy analysis.

Two of these areas, facilitating access to finance, facilitating new business, trade delegations, promoting local procurement, are also rated as important. This indicates market gaps in BMO services and offers opportunities for BMOs to meet the unmet demand for services, especially in areas that are rated important (access to finance, facilitating new business).

Services are not readily available for a number of BMO services including several that are important to the private sector: i) Facilitating access to finance,

ii) Educating and engaging the media on key sector issues,

iii) Facilitating new business, trade delegations, promoting local procurement.

On average, companies surveyed received some form of the listed services from BMOs 4.6 times per year. The services most often received are 1 Supplying business and policy information, and

2 Facilitating access to finance. Services that were received least frequently included i) conducting research and ii) providing policy analysis and monitoring the legislative and regulatory process for changes affecting industry.

On average, companies surveyed received some form of the listed services from BMOs 4.6 times per year.

Figure 2.1.1

Figure 2.1.2


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100% 80% 60% 40% 20% 0%

Educating and engaging the media on key sector issues.

Professional development training.

Market and industry specific information.

Facilitating new business, trade delegations, promoting local procurement.

Monitoring legislation and regulations that affect industry.

Conducting research and providing policy analysis.

Supplying business and policy information.

PPD Platforms, lobbying government for policies, services, etc.

Organising conferences, workshops, seminars, networking opportunities.

Facilitatingaccess tofinance.Yes

No

BMO Service Availability


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Annual Frequency BMO Services Are Received


Identifying and providing professional development opportunities for members training, guidance/manuals and case studies.

Market and industry specific information eg. domestic or international pricing, supply/demand reports, market programming.

Facilitating new business, identifying business leads/tenders, traders/industry conference, representing industry on

Monitoring legislative and regulatory process for changes that affect industry.


Supplying business and policy information through BMO publications, monthly electronic updates, congress, magazine

Public-private-dialogue providing platforms for discussion to communicate problems and needs for industry.


Facilitating access to finance.

years


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years

The findings on membership indicate that there are gaps in the availability of many services, including ones that businesses rate as important. This suggests there are opportunities for BMOs to offer more services, particularly those which are in high demand.

The findings indicate that some BMOs focus on larger companies and do not offer relevant services to smaller companies or the informal businesses in their sector. This presents a strategic choice for BMOs: either to develop the market for larger corporate members and specialise in these types of members, or diversify and offer a package of services for smaller and informal sector businesses.

BMO membership in the past was often mandatory for operation. This is an effective way to increase membership and may be a useful strategy to explore. It could be a way to strengthen BMO membership bases and BMO revenue, enable them to better represent and coordinate member interests and give BMOs more credibility with Government and other stakeholders as genuinely representing their sector. However, it should not be a means of avoiding delivering relevant and affordable services to members.

The findings suggest that there could be opportunities for BMOs to develop membership amongst sole traders and micro businesses and to use existing members, and their goodwill, as a means to influence peer companies to join. BMOs need to be seen to focus on meeting member needs impartially and look at serving smaller businesses and the informal sector.

2.1.4 BMO service performance

The performance of BMOs on service delivery is variable across the various services. Performance is relatively stronger on services such as: educating and engaging the media, organising conferences, workshops and seminars, and professional development and training. BMOs are performing relatively weaker in services such as: conducting research and providing policy analysis, facilitating new business, trade delegations, promoting local procurement, and monitoring legislation and regulations that affect industry. Access to finance, a highly rated service in terms of importance, is not being performed well.


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BMO performance on service delivery is generally rated as fair, but i) Facilitating new business trade delegations and promoting local procurement,

ii) Facilitating access to finance and

iii) Conducting research and providing policy analysis are perceived as being least well performed.

Figure 2.1.3


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Facilitating new business, trade delegations, promoting

local procurement, etc.

Monitoring legislation and regulations that

affect industry.



PPD Platforms, lobbying government for policies,

services, etc.

Organising conferences, workshops, seminars,

networking opportunities.


Very Poorly Poorly Average Good Excellent

BMO Performance On Service Delivery


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The findings on performance also showed that larger companies (medium: 40-75 employees, large: above 76 employees) rated BMO performance both more strongly positively and more strongly negatively than small and micro businesses. This trend is difficult to interpret, but suggests that there is a wide range of performance quality by BMOs serving these company size segments. Male respondents tended to rate the performance of BMOs lower than female respondents.

The findings indicate that there are opportunities for BMOs to develop competitive advantage to gain new membership market share, especially in services that are rated highly important (access to finance, facilitating new business, monitoring the legislative and regulatory environment) and which are not being well performed (conducting research and providing policy analysis, facilitating new business, trade delegations, promoting local procurement, and monitoring legislation and regulations that affect industry).

Perceptions about importance, value, fair price for BMO services

The findings indicate that both members and non-members value the importance of all BMO services, but i) Access to finance,ii) Facilitating new business and iii) Monitoring the legislative and regulatory environment are especially important.

Generally, both members and non-members rate all BMO services as important, but especially important arei) Access to finance, ii) Facilitating new business and iii) Monitoring the legislative and regulatory environment.

The results also indicate that ‘current BMO member’s almost always rated services more highly than ‘past members’, ‘potential members’ or ‘those who are aware but not interested’. ‘Current members’ were followed by ‘past members’, whilst the average place scores for ‘potential members’ and ‘those aware but not interested’ were both noticeably lower. These results indicate that those who are more familiar with BMO services tend to rate the services as more important, and suggest an opportunity

2.1.5

Figure 2.1.4


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Facilitating new business, trade delegations, promoting

local procurement, etc.

Monitoring legislation and regulations

that affect industry.

Organising conferences, workshops, seminars,

networking opportunities.

PPD Platforms, lobbying government for policies,

services, etc.






N/A Indifferent Not Important/Beneficial

Average Important/Beneficial Highly Important

Importance Of BMO Services


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for BMOs to attract new members through making them more aware of the value of their services.

Analysis of the results also indicates that larger companies place greater importance on BMO services than sole traders and micro businesses. This is could be a reflection of the greater complexity in operating a larger business as well as greater focus on export markets and greater compliance requirements associated with operating a larger bossiness. These results indicate that some BMOs should focus efforts on developing members amongst larger companies. In addition, the analysis also suggests that the medical, mining and commerce sectors place greater importance on BMO services. It is not clear why these sectors placed greater importance on BMO services. The data collection included asking respondents to estimate the value per month of BMO services. The findings indicate that companies gave the highest ratings for the following services: facilitating new business and facilitating access to finance, followed by PPD platforms and lobbying government for policies and services and monitoring legislation and regulations that affect industry.

The perceived value of three BMO services were perceived to be of much greater value than other services, namely: i) Facilitating new business andii) Facilitating access to finance, andiii) PPD platforms, lobbying government for polices and services.2

The average estimate of a fair price for a BMO service was $107 per month per service. However, businesses said that they would pay substantially more for two services: i) facilitating access to finance ($258) and ii) facilitating new business ($188).

Figure 2.1.6 The average perceived fair price for BMO services MO services were perceived to be of much greater value than other services, namely:i) Facilitating new business andii) Facilitating access to finance, iii) PPD platforms, lobbying government for polices and services, andiv) Organising conferences, workshops, seminars and networking opportunities.3

Figure 2.1.5

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Facilitating new business, trade delegations, promoting local

procurement, etc.

Monitoring legislative and regulations that attract industry.






Average Perceived Fair Price For Services ($/month)


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The cost to value ratio analysis indicates that five services have higher ratios than other services: PPD platform, lobbying government for polices and services; professional development, training, workshops, etc; facilitating new business; monitoring legislation and policy information that affect industry; market and industry specific information.4

This finding suggests that there are substantial opportunity gaps to increase prices for services with high ratios. BMOs can explore customising their membership pricing structure according to the value that members place on different services and their willingness to pay for these services.

About a third of BMO members said that they believed that they were getting exceptional or reasonable value for money for BMO services, about a third said the value for money was fair, and a further third said that the got little or extremely little value for money.

Whilst most companies who are members feel they get fair value for money for BMO services, there is much room for improvement.

Figure 2.1.7

2 Please see the Methodology section for issues affecting the data quality of this question area



Figure 2.1.8

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Facilitating new business, trade delegations, promoting local

procurement, etc.

Monitoring legislative and regulations that attract industry.






Cost To Value Ratio Analysis For BMO Services


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Exceptional value for money

Value for money

Fair

Little value for money

Extremely little value for money

Value For Money For BMO Services


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Comments from respondents who said that they were getting exceptional value or value for money related to satisfaction with benefits:

- We get a lot of business from them. - Our BMO successfully lobbied Government to grant us duty free import equipment. - Being affiliated to them enables us to bid for big jobs. - Do presentations on safety. - Keep us well informed. - They are attending to our problems. - We are getting business ideas. - Found it easier to identify target markets.

- We get basic services. - We do not pay much and there are some issues they can address better. - They are trying under the circumstances. - There is a lot of room for improvement.

Comments from those who rated value for money as fair include:

Comments from those that rated value for money as little value or extremely little value included:

- Nothing, they just want to go to hotels and enjoy themselves at the expense of members. - We don’t see any meaningful benefit. - Subscriptions are too high. - They have done nothing tangible. - They are hardly in touch with members. - Empty promises.

This finding suggests that there is plenty of scope for BMOs to improve perceptions of value for money amongst members through providing results and benefits that are meaningful and tangible to members. Earlier sections of this report highlight ways in which this issue could be addressed.

2.1.6 Membership Models and FeesThe responses on the attractiveness of a variety of membership models indicate that the Customised and International models are most attractive to members.5


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This suggests that companies want BMO membership models which are customised to their needs and which create access to people worldwide.

Respondents found the Customised and International BMO membership models most attractive.

Of the 81 respondents who answered the question about how much they pay annually for membership fees, 4% paid monthly, 5% paid quarterly, ½ % paid bi-annually, 13% paid annually, 0.2 % paid different rates for the services.

Of the 81 respondents who answered the question the average amount paid in annual membership fees were as follows:

Average annual membership fees are low, with fees averaging about $200-$375 per annum or $17 - $31 per month.

Figure 2.1.9


Table 2.1.1


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Membership Models% 1 & 2 Rankings

Electronic

Open

Multi-tier

International

Customised


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ESTABLISHMENT SIZE AVERAGE ANNUALMEMBERSHIP FEE

Individual Entrepreneurs (0 Employees)

Micro Businesses (1 - 5 Employees)

Small Businesses (6 - 30/40 Employees)

Medium Businesses (30/40 - 75 Employees)

Large Businesses (+75 Employees)

$500

$348

$349

$204

$374

Average annual membership fees are low, with fees averaging about $200-$375 per annum or $17 - $31 per month.

The interviews conducted suggested that some BMOs have differential membership fee rates and charge monthly, quarterly, biannually or annually. Rates of fees vary considerably between large and small companies, e.g. $12000/quarter for a large company to $1/month for an informal sector member. On average, most members seem to pay a few hundred dollars per annum. A few based their fees on the turnover of the member.

Average annual membership fees are low, however, with fees averaging about $200-$375 per annum or $17 - $31 per month.

This is low compared to the average fair price for services analysis above, which indicates that members would be prepared to pay a minimum of about $50 per month ($600 per annum) for most services and up to $250 per month ($3,000 per annum) for services they value highly.

It is interesting to note that there does not seem to be much differentiation in annual membership fees amongst different sized companies.

Table 2.1.1


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2.1.7 Communication With Members

The findings show that companies want to see BMOs using email, company visits and the Internet to communicate with them. Female respondents had a higher preference for email communication than male respondents. The preference for email and company visits is a trend across all company sizes. Two of these methods use electronic media, and is an indication of the increasing use by companies of these methods as means of communicating and obtaining information. This would be especially the case amongst the new generation entrepreneur.


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Email

Company Visits

Internet

Print Media

Telephone

TV

Radio

Social Media (Facebook, Twitter, etc.)

SMS

Postal

Preferred Method For BMO Communication


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Figure 2.1.10 Companies prefer that BMOs use electronic media and face-to-face company visits to reach out to them.

The interviews conducted suggested that whilst BMOs are using email, websites and the press to communicate with members, few were making company visits. To make businesses more aware of BMOs and their services, respondents recommended that BMOs: advertise and be more visible, make company visits and educate potential members and the public about what they do and offer.

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ANNEX SECTION

A LIMITATIONS OF THE METHODOLOGY SAMPLE

The methodology of the study required an in-depth reflection of the profile of the emerging generation of entrepreneurs and to ensure the validity of the findings through the use of triangulation methods.

The methods of data collection required included:

a) Qualitative research Desk research / literature review In-depth interviews with stakeholders and BMOs

b) Quantitative research Face-to-face interviews with businesses selected through random sampling methods, the RAND Formula.

The sample for the quantitative research suggested for the study was 400 comprising a mix of members (300) and non-members (120).

The assignment was implemented in seven phases namely:

Project kick-off and orientation Sample design Questionnaire preparation Enumerator preparation Pilot survey Fieldwork Data capturing in CSPRO and cleaning. Analysis was done in .sps.


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A presentation to stakeholders on the key findings was done on 2 September 2014 Preparation and submission of the draft reports 3-12 September 2014.

The sample design for the assignment involved:

Key informants - gathering the names and contact details of key informants to be surveyed. These included management staff of 11 BMOs. These informants provided a perspective on the background and key issues affecting the BMO sector. Please see the Annex section for details of those interviewed.

Corporates - The sample for corporate clients was agreed with ZIMBISA prior to the fieldwork to be 420 evenly split between 1 BMO members, 2 Past BMO members who are not currently members of any BMO, 3 Potential members and 4 Companies that are aware of BMOs but who are not interested in being members.

MEMBER STATUS TARGET SAMPLE ACTUAL SAMPLE

Members

Potential Members

Past Member, But Not Currently A Member

Aware Of BMOs But Not Interested

TOTAL

105

105

105

105

420

111

103

106

97

417


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It was intended to use the RAND method for sampling, but this proved difficult as a list of companies to select from was not available. Therefore companies were randomly selected. Two levels of stratification were used within the sample, that is: economic sector and establishment size. Industry stratification was designed to ensure that all key sectors in the economy were covered.

ECONOMIC SECTOR STATUS ACTUAL SAMPLE

Manufacturing 93

Commerce (Buying And Selling Of Goods & Services)

Mining And Extractives (eg. Minerals & Timber)

Agriculture

Tourism

Finance

Informal Sector

Construction

Engineering

Medical

TOTAL

269

10

14

6

3

13

1

3

5

417

Size stratification was designed to ensure that data was captured from individual, micro, small, medium and large companies. Size was defined following using the definitions used in the FinScope MSME Survey Zimbabwe 2012 which is based on the number of employees an establishment has.


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The demographic information collected from the study indicated the following:

The sample included 111 female respondents and 306 male respondents.

ESTABLISHMENT SIZE STATUS ACTUAL SAMPLE

Individual Entrepreneurs (0 Employees) 17

Micro Businesses (1 - 5 Employees) 138

Small Businesses (6/30 - 40 Employees) 216

Medium Businesses (30/40 - 75 Employees) 17

Large Businesses (+75 Employees) 29

TOTAL 417

GENDER OF RESPONDENT ACTUAL SAMPLE

Female 111

Male 307

TOTAL 417

Sixty seven percent of businesses are male owned (generally 100% shareholding), 23% of businesses are female owned (generally 50% or lower) and very few businesses (3%) are owned by youth.


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OWNERSHIP STRUCTURE % HELD BY OWNERSHIP CATEGORY

Male Owned 67%

Business Operated By Women - But Not Owned 23%

Business Operated By Youth - But Not Owned 3%

Don’t Know 7%

TOTAL 100%

The percentage of female managers in the businesses surveyed was 33% compared to 67% male.


Female Managers 33%

Male Managers 67%

TOTAL 100%

The percentage of employees in the businesses surveyed was 27% female and 73% male.


Female Employees 27%

Male Employees 73%

TOTAL 100%


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B ABOUT BUSINESS MEMBERSHIP ORGANISATIONS IN ZIMBABWE

Business membership organisations are membership organizations engaged in promoting the business interests of their members.8 BMOs can be divided into two major groups: business associations and chambers of commerce and/or industry. Business associations (e.g., industry associations, small-scale enterprises’ associations, women’s associations, or employer’s associations) are usually private legal organizations concentrating on single branches, firm sizes or functions. They are characterized by a homogeneous membership structure and usually include a relatively small number of potential members. Chambers typically combine the broad based business interests of a certain geographic region.

BMOs can reach out to a large number of firms and represent and voice the concerns of their members at the policy level, creating a constituency for change that can lead to sustainable, bottom-up policy reforms. However, most BMOs have a mixed membership including smaller and larger enterprises, with at times diverging interests.

Business Membership Organizations (BMOs) include: business associations chambers of commerce federation of business associations employers’ clubs private sector forums.

Members are usually required to pay regular dues, which provide BMOs with the majority of their funds. One of the primary purposes of BMOs is to attempt to influence public policy in


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a direction favourable to the group’s members, enhance the business environment as well as offering members a number of business related services.

Membership services can be classified into trade and market development, training, advice and consulting, information and networking, office facilities and infrastructure services, and delegated government functions. A BMO’s service portfolio will be influenced by its capabilities and experiences, the competition and demand in service markets, the necessary financial and personnel resources, and the potential short and long-term benefits.

BMOs can be a platform for promoting a better investment climate in developing countries. In order to be a strong and reputable and representative of the private sector, vis-à-vis the public sector, BMOs should have the capacity to advocate the interests and concerns of their members; be strong organizations with a proper governance structure; and respond to their members needs by delivering required services and information. BMO membership models are typically structured in five broad model types: customised, electronic, international, multi-tier and open.

Role of BMOs in promoting a better business environment in Zimbabwe

There are several BMOs in Zimbabwe that represent the interests of different economic sectors. Some of the reputable BMOs include the Confederation of Zimbabwe Industries (CZI) , Construction Industry Federation of Zimbabwe (CIFOZ), Advertising Media Association (ADMA), the Chamber of Mines Zimbabwe (CoMZ) and the Zimbabwe National Chamber of Commerce (ZNCC).

These BMOs provide an interface between policy makers and the companies they represent. ZNCC, for instance, aims to be a leader in business development in the national economy and a channel of communication between business and the various authorities in Zimbabwe. CZI exists to foster and encourage, promote, protect and advance the sustainable growth and development of the manufacturing sector and business in Zimbabwe.

6 Vitoria, B and Ngarivhume, J., Youth Unemployment Research Framework, The NGO Joint Initiative for Urban Zimbabwe, March 2012

7 www.publicprivatedialogue.org

8 http://definitions.uslegal.com/b/busi-ness-associations


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The BMO sector in Zimbabwe started in the pre- independence era with only seven major BMOs. These included Zimbabwe National Chamber of Commerce (ZNCC), Confederation of Zimbabwe Industries (CZI), Commercial Farmers Union (CFU) and the Bankers Association of Zimbabwe (BAZ). Most other BMOs emerged after independence. Currently Zimbabwe has approximately 80 BMOs that are in operation.9

9 Source: Sekai Kuvarika of the International Council of Swedish Industry, 8 September 2014.

CUSTOMIZED Members custom build their membership packages to suit their interests and moods.

Members analyze how they want to use their membership, and this leads to higher engagement.

Associations must conduct substantial membership research and allow time to transition all current members.

Membership is restricted to web-based resources and programming.

Memberships provide limited access so they cost less and therefore generate less revenue.

ELECTRONIC New streams of revenue are added without incurring expenses (eg. mailing and printing).

Membership is accessible to people worldwide.

Programming and benefits may need to be developed; engagement more difficult.

INTERNATIONAL Membership expands into new markets and regions, supports globalization efforts.

Menu of membership options based on interests, professional designation, budget.

Requires the ability to manage multiple benefits for multiple audiences.

MULTI-TIER Members like being able to choose which options best suit their needs.

Membership does not require the payment of dues.

People perceive there’s no value because there’s no cost to join.

OPEN Leads to substantial membership growth.

SYNOPSIS THE PROS THE CONS

Source: Sarah L. Sladek , ‘The End of Membership As we Know It’ page 95


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C BIBLIOGRAPHY

Sladek, L S (2011) The end of membership as we know it : Building the fortune- flipping Must-have association of the next century, 6: 93-99

Mikhnev,A (2003) Building the capacity of business membership organisations, World Bank Groupwww.publicprivatedialogue.org/powerpoints /plenary http://www.ifc.org/sme

Kameyana.S (2001) Models of SME sector developmentwww.systemdynamics.org/conferences/2001/papers/Kameyama_1.pdf

http://smallbusiness.chron.com/meaning-business-organization-41925.html

Study on Knowledge Based Support for SME Sector Development, JICA, March 2000

http://publications.iadb.org/handle/11319/5938?locale-attribute=en

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1A Kent Road Chisipite Harare ZimbabweP: +263 86 7710 2579E: [email protected]: www.zimbisa.org (http://www.zimbisa.org)

51 Kelvin Road North Graniteside Harare ZimbabweP: +263 4 7795 27/32/35/38/41/44/47E: [email protected]

Online 29 2014 Membership Market Study Report

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