Hospitality concern, Rainbow Tourism Group (RTG), is setting up an offshore technological centre in Dubai in order to access the best technology available worldwide and to procure smartly, Business Times can reveal.
CEO, Tendai Madziwanyika confirmed the development saying RTG was now seeking regulatory approvals. RTG has since engaged consultants to carry out additional research in Dubai.
“Dubai is an exciting prospect. We want to set up a technology centre to go into the rest of the world using Gateway Stream (mobile and web application platform). We also want to be able to procure smartly. In other words, when you are in Dubai you are able to see the world because they have got facilitation,” Madziwanyika told Business Times.
He added: “And it doesn’t necessarily mean that we are going to be buying from there . No. But it gives us a bird’s eye view as to where things are.
“So, as we do refurbishments, as we take over new entities and so forth, we want to be able to have access to the best technologies, the best materials. That is the only way we can upscale our facilities even in Zimbabwe, because when we are here, we only depend on China directly or South Africa next door. We now want to be world class. We always lag behind because of supply chains.”
According to Madzivanyika, Dubai is a major international hub for travel and tourism.
“When it comes to Dubai, it’s an emerging global financial centre. It has also set up mega procurement centres . Additionally, it has capacitation and facilitation for global procurement. So, being based out there, you can see a lot of products that could be useful for us. And they have invested in logistics to be able to move. So, we think that it’s (Dubai) a good base for investing in travel and tourism.”
He added: “It’s a good base in terms of procurement as well as for technology . Also, Dubai has got a lot of tax-free zones that you can invest a business in for example your technology hubs. We want to be part of that because we want to have a cutting edge in Africa. In Dubai, we will be speaking to like-minded businesspeople, we will be seeing the latest technologies and the latest programming languages.
“So, we want to be there(in Dubai) . It will help us with the address. Imagine a company trying to go to Africa and we say we are Gateway Stream out of Harare and then we are Gateway Stream out of Dubai.
“ Not that there is anything wrong with Harare. But, listen, it’s (Dubai) a financial hub, it’s a technology centre.”
Madzivanyika told Business Times that RTG has begun the process of obtaining regulatory approvals.
He said the hospitality group has also engaged consultants.
“We have already begun to ask the authorities for regulatory approvals, including those from the central bank. We have been doing further research and we have engaged consultancy to advise us on the best set up, and on the best instruments because Dubai has tax-free zones.
“It has got mainland and offshore companies and each of those have advantages and disadvantages. So, whether you go in as a mainland company or an offshore company, there are positives and negatives. So one has to make sure that you are clear about which is the best model for the particular business,” Madzivanyika said.
Madziwanyika also revealed that RTG has cut back on borrowing, which has caused its gearing ratio to drop from 70% reported in 2012 to less than 1% at the end July 2023.
The gearing ratio is of particular concern to lenders because a high gearing ratio increases the likelihood that their loans won’t be repaid.
A low gearing ratio represents a low proportion of debt to equity.
A gearing ratio is a measurement of companies’ financial risk, which is one of the most popular methods of evaluating a company’s financial fitness.
A company is said to be highly levered or geared if its gearing ratio is greater than 50% because, in periods of lower profits and higher interest rates, it would be more vulnerable to loan default and bankruptcy.
A gearing ratio lower than 25% is considered low risk by investors and lenders.
This means with a gearing ratio of less than 1%, RTG is financially stable.
“It (debt) should be about ZWL$300 000, which is short-term. It means that our balance sheet has so much capacity to unlock value for our shareholders. We paid off (the bulk of the debt) from operational funds, that’s why it took us more than seven years to fully come out of debt.