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The fate of ZK advertisement

Discussion in 'Biashara, Uchumi na Ujasiriamali' started by Geza Ulole, Jul 4, 2011.

  1. G

    Geza Ulole JF-Expert Member

    #1
    Jul 4, 2011
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    Doubts hit PR industry after ZK collapse[TABLE="class: contentpaneopen"]
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    [TD]Written by Jeff Mbanga [/TD]
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    [TD="class: createdate"] Sunday, 10 April 2011 17:20 [/TD]
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    [TD] When, in August 2010, ZK Advertising Limited won the overall excellence award during the Public Relations Association of Uganda gala, corporate companies took notice of the agency's magic wand when it came to building brands.
    After all, ZK had managed to turn the Uganda Health Marketing Group into a popular company whose message of the need to fight the spread of HIV/AIDS transcended all generations in the country. But what the corporate companies did not notice was the simmering financial trouble that was about to explode at ZK.
    Faced with a weak cash flow and a huge pile of debts, ZK bought time by sizing down its staff and prolonging payment to its restless suppliers. The company hoped that Zadock Koola, the owner of ZK Group who is based in Tanzania, would come in with a bailout package. It never happened!
    So, when ZK Advertising Uganda, one of the largest agencies in the country, decided to suspend business two months ago, the firm's financial woes blew a hole into the optimism that Uganda's growing adverting industry had created. It also represented the start of a long road for managers of advertising agencies to reassure sceptical clients that the ZK debacle was a one-off.
    And then, the timing of ZK's troubles could not have come at a worse time; international PR companies have started to make their entry into Uganda, snatching lucrative accounts from local players.
    "The problem with these big companies is greed," says an owner of a fairly small agency, who declined to be named due to his relations with other players in the market.
    "They are not staffing well and they do not facilitate their staff well," he said, giving a direct reference to how ZK lost its biggest client, Zain. He added that "they didn't bother too much on smaller clients."
    Our source says that Saatchi and Saatchi's loss of the MTN account to South Africa's Metropole is weighing heavily on the agency's finances. Saatchi and Saatchi, together with ZK, for a long time led the way in designing marketing strategies of the biggest companies in Uganda.
    Anthony Wanyoto, who was the Managing Director of ZK Advertising Uganda before it collapsed, agrees that the loss of the Zain account took away a huge chunk of the agency's revenue.
    "The Zain account would take care of our salaries, rent, and many other operations," he said. Wanyoto explained that the Zain account covered about 70% of the company's operations.
    [h=3]'Burthening' taxes[/h] ZK first managed Celtel before Zain bought the company. In June 2010, India's Bharti Airtel bought Zain Africa for $10bn. Airtel then decided not to renew ZK's contract and, instead, offered the deal to Ogilvy, an international agency. Nevertheless, Wanyoto says that by the time Zain pulled out, it accounted for just 40% of the agency's revenue.
    He said that ZK had brought on more smaller clients like Uganda Health Marketing Group, Woolworth, Uganda Insurance Association, just to mention a few. The problem with ZK, therefore, was not just the loss of Zain but another bigger issue – tax. Since 2004 when it opened shop in Uganda until July 2010, ZK was not exempted from withholding tax.
    To qualify for withholding tax exemption, a company has to carry out regular auditing of books, has to be tax compliant and paying tax on time, among others. However, ZK's failure to qualify for this exemption led to the firm's withholding tax to rise up to Shs 1.8bn, which is about $800,000, says Wanyoto.
    The company, therefore, faced problems of paying off its suppliers, the biggest of whom were media houses. At the time of its closure, ZK owed $700,000 (about Shs 1.7bn) to suppliers. However, ZK still demands about Shs 200 million from debtors, according to Wanyoto.
    Wanyoto said Zadock Koola still intends to pay off the suppliers as he weighs different options, one of which includes selling a stake in the company. Wanyoto also pointed out that all ZK employees, who by the time of closure had gone down to 12 from 35, would be paid their salaries. He, however, did not give a time frame when all this would happen.
    Attention now turns to the relevance of local agencies amidst the collapse of ZK and doubts at Saatchi and Saatchi. Allan Bassey Muyinda, the Business Development Director at Brandfield Advertising, points out that companies still need to work with agencies either way.
    "Agencies know how to draw up concepts and PR strategies. We know this too well. And we go out deep in the villages to assess these strategies, which many company staff might not be able to do," he said.
    Muyinda, however, said that the scepticism created by ZK would take its toll on the industry. "Already, the small companies do not like to spend [on advertising] because they see that as a cost and not an investment. We have challenges convincing them," he said. Wanyoto also agreed that "when you lose a big client, the smaller ones start questioning your ability."
    The three big telecom companies, who, together with the beverage industry and banks, are the largest advertisers, have turned to foreign agencies to carry out their marketing. MTN, utl, and Airtel, are being managed by foreign agencies.
    Simon Kaheru, the owner of Media Analyst, a PR agency, says the entry of international agencies is good for the local players in the market.
    "The good thing is that somehow they (international agencies) have to partner with us. Remember, we know where all the potholes in this city are."
    Kaheru said the entry of international agencies will help raise the standards in the market and, therefore, offer quality service to clients.

    The Observer - Doubts hit PR industry after ZK collapse

    [TABLE="width: 480"]
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    [TD="class: headline1, colspan: 2"]Cash starved ZK Advertising on sale[/TD]
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    [TD]Sunday, 10th April, 2011[/TD]
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    [TD]E-mail article[/TD]
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    [TD]Print article[/TD]
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    [TD="colspan: 2"] By Stephen Ilungole

    TBW Africa is leading a host of other local and international PR agencies in taking over the cash-strapped ZK Advertising.

    TBW Africa made an unspecified offer after doing due diligence for ZK operations in Uganda, Kenya, Tanzania, DR Congo, Zambia and Nigeria, Anthony Wanyoto, the former managing director, said over the weekend.

    Owned by Zadock Koola, a Tanzanian advertising investor, ZK closed shop in Uganda in February after running into a $800,000 debt (about sh2b).

    Its property has been moved to the Muyenga-based A1 Outdoor, a sister company.

    ZK had operations in 15 African countries, but up to seven of them have run into financial troubles.

    "Our biggest challenge was lack of capital to pay employee salaries and the daily operation costs. We wanted a bailout from the owner, but he wasn't forthcoming. That is why we closed operations to sort out supplier and debtor-related issues," Wanyoto said.

    He also blamed their woes on the 6% withholding tax component. "It affected out working capital. It increased our operations costs because it means we were paying suppliers 100% yet we received only 94%. We were only exempt from July to December 2010," Wanyoto, explained.

    "We have started the recovery process from Uganda Revenue Authority, which is still ongoing."

    He said if the withholding tax remittances were recovered, it could offset some of the deficit.

    "The other opportunity is a bailout from the owner and other investors who want to buy into company," Wanyoto said. Wanyoto distanced himself from the failure of the company, blaming it on its owner.

    "We kept asking for recapitalisation in vain. The red flag started in May 2010, but the bailout was not forthcoming. That is why they (owners) have taken over the debt and moved to the sister company."

    He said he had several options including at ZK Advertising. "I am available for any opportunity that comes up. I am still passionate about advertising."
    [/TD]
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    http://www.newvision.co.ug/D/8/220/751685
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  2. The Boss

    The Boss JF-Expert Member

    #2
    Jul 4, 2011
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    Aiseeeee

    aniuzie ile dar villlage now...
     
  3. L

    LAT JF-Expert Member

    #3
    Jul 4, 2011
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    huyu jamaa pia si ndiye owner wa ule mradi wa shopping mall ya Dar Village pale jirani na Rose Garden hivi umefikia wapi ......?
     
  4. CAMARADERIE

    CAMARADERIE JF-Expert Member

    #4
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    [​IMG]

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  5. k

    kashwagala Senior Member

    #5
    Jul 4, 2011
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    Kaaazi kweli kweli...sijapita mitaa ya Dar village siku nyingi,hivi yale mabango ya opening soon bado yapo?
     
  6. CAMARADERIE

    CAMARADERIE JF-Expert Member

    #6
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    SOON iliisha May 2010...na bado hapajaisha
     
  7. Mponjoli

    Mponjoli JF-Expert Member

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    Jul 4, 2011
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    Jamaa anapitia wakati mgumu sana kwa sasa. Lakini kwa watafutaji hii ni hali ya kawaida. Wafanyakazi (risk free) utawajua tu kwa comment zao za kebehi. Go Go Go Zadock
     
  8. S

    Stuxnet JF-Expert Member

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    Jul 4, 2011
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    Analipa zambi zake za kufanya ufirauni na mabinti za watu. Si unajua hawa ndiyo G7 ambao walikuwa wanawachukua mabinti wote Miss Tanzania na kuwaweka hoteli za ufukweni na kuwafanyia michezo michafu. Uncle Lundenga anapewa uchache then anawaunganisha hawa akina Zadock, Mlatie na wenzao.
     
  9. Mshume Kiyate

    Mshume Kiyate JF-Expert Member

    #9
    Jul 4, 2011
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    Mkuu, sio pale jirani na TMJ Hospital, pembeni ya Tanesco?
     
  10. M

    Misterdennis JF-Expert Member

    #10
    Aug 25, 2011
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    Wivu unawasumbua.
    ZK anajipanga ..... mjasiria mali hakati tamaa...
     
  11. Nzi

    Nzi JF-Expert Member

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    Aug 25, 2011
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    Duh! Mkuu nadhani hujui RG ilipo..anyway hiyo proposed Dar Village ipo nyuma ya yaliyokua makao makuu ya Celtel, nyuma ya viwanja vya michezo vya Makumbusho...kwenye barabara ya kuelekea ofisi za TCU, China Town na njia panda ya kwa Mwalimu.
     
  12. Mambo Jambo

    Mambo Jambo JF-Expert Member

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    Zak will be back and stronger than ever, umri bado unamruhusu sana.
     
  13. K

    Kasanga Member

    #13
    Aug 25, 2011
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    Dar Village iko sokoni! Wachina(Contractors) wako mahakamani wanadai chaO na dameges! Halafu Magufufuli nae hataki kuona A1 Outdoor kwenye barabara zake! jamaa hali ni tete kama ilivyokuwa kwa baba wataifa!
    Ufirauni waliokuwa wakiufanya hapo ROSE GARDEN na hiyo G8 yao na ZADDOCK akiwa Chairman haya ndiyo malipo yao hapahapa duniani! Mwingine mhanga wa G8 ni Lawrence Masha! alikuwa one of G8 members nae kwishilia mbali! kuna mmoja wa G8 members nae kafa kwa ajali ya gari one year back!
     
  14. Nduka Original

    Nduka Original JF-Expert Member

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    Aug 25, 2011
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    Guys Zadock is a mentor and guru in all cards, he has lot of projects Dubai, Nrb, RSA.
    I am sure he knows what he is doing, ngoja nitamfowadia haya majungu yote mnayopiga
     
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