Tapiwa Maswera Correspondent
The people of Zimbabwe have endured a total collapse in their entire savings twice in less than a decade.
In 2009, the entire savings of the nation were wiped out completely. This time around losses have been as high as 95 percent.
This collapse has left pensioners and policyholders impoverished and the non-banking financial services industry in Zimbabwe faces an existential crisis.

The insurance industry has also not been very forthcoming about what happened to the assets that survived hyperinflation. This notwithstanding the findings of the commission of inquiry which said the bulk of the assets of insurance companies and pension funds survived hyperinflation and should have been used to pay better benefits.

People driven Solutions
In 1978, the farmers in a small Chinese village called Xiaogang in China, gathered in a mud hut to discuss a very serious problem. Back then China was rabidly communist.
No one owned anything. Everything was owned collectively. Working hard made no difference to anyone individually — outcomes were shared equally between participants. There was never enough food to go around. The villagers often had to go to other villages to beg for food.

Their children were going hungry. And everyone was desperate. So desperate were they, that they were willing to sign a secret contract that defied the policies and directives of the Communist Party of China. They knew that defying the policies and directives of the communist party could get them executed. But they were too hungry and desperate to care.

They decided they had to try this experiment — and to write it down as a formal contract, so everyone would be bound to it.
Instead of getting executed by the communist party, the document ended up transforming China’s economy in ways that are still reverberating today. So what was in this famous contract that we in Zimbabwe could learn from today?

Isolating, measuring and rewarding individual’s contribution
The Xiaogang villagers’ idea was very simple. Rather than farm as a collective, pool resources and share outcomes equally as was the norm in the whole of China, they decided that each family would get to farm its own plot of land. If a family grew a lot of food, then that family could keep some of the harvest from their own plot of land.
This was a radical idea which flew directly into the face of the prevailing communist doctrine.

The farmers (a total of 18 villagers) agreed to divide up the land among the families.
Each family agreed to turn over some of what they grew to the government, and to the collective. And, crucially, the farmers agreed that families that grew enough food would get to keep some for themselves.
The contract also recognised the risks the farmers were taking. If any of the farmers were sent to prison or executed, it said, the others in the group would care for their children until age 18.

The model that transformed China
At the end of the season, they had an enormous harvest: more than in the previous five years combined. The per capita income of Xiaogang climbed to 400 yuan from 22 yuan. That huge harvest gave them away. Local officials figured out that the farmers had divided up the land, and word of what had happened made its way up the Communist Party chain of command.
Some open-minded communist party officials promised to protect the village as long as their practice didn’t spread. And fortunately for the farmers, at this moment in history, there were also powerful people in the Communist Party who were looking for models on how to change China’s economy. The Chinese leaders ultimately decided to hold them up as a model. Within a few years, farms all over China adopted the principles in that secret document. People could own what they grew. The government launched other economic reforms, and China’s economy started to grow very rapidly.

Transforming Zimbabwe’s financial Services Industry
Zimbabwe’s financial services industry stands out as an industry in which customer driven solutions could restore confidence and revive the industry.

There are three key areas where customer driven solutions could make an immediate impact:

1) Policyholder or pension fund participants should be involved in the development and pricing of insurance and pension products. Great financial products are built by listening to what the customer wants, not by repeating what has worked before or imposing solutions that have been cooked up by insurance company executives.

2) Accountability and transparency for insurance companies and pension funds should be based on the customer’s understanding of financial products. This is be critical. The lack of transparency and accountability is the single biggest stumbling block to the revival of the industry.

3) Like the case of the Xiaogang villagers, policyholders and pension fund participants want to know, own and control the assets their money is buying. They want to see a direct relationship between their input and the outcome. There is no rational human being who will pour his energy into an enterprise whose outcome they cannot influence. No level of sophistry will pervert this basic fact.

Conclusion
The example of the Xiaogang villagers demonstrates that simple ideas that meet the basic needs of people can spark a revolution.
Exponential growth and miraculous profits are possible, when one listens and interacts dynamically with customers.
And very often, customers themselves know what works and what does not and they are willing to share this information with anyone who cares to listen. Are our financial services executives willing to listen?

Tapiwa Maswera is an Executive Director and founder of Global Worldview, a company dedicated to the development of world class leadership. He can be contacted at [email protected]