Friday, May 25, 2018

Business loses confidence in Mnangagwa

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THE business community appears to have lost confidence in President Emmerson Mnangagwa’s new political dispensation, with the latest Confederation of Zimbabwe Industries (CZI)’s composite Business Confidence Index (BCI) indicating a negative trajectory, particularly in the first quarter of this year.
BY TATIRA ZWINOIRA
Since he took over levers of power in November last year, Mnangagwa’s administration had been riding on a wave of optimism, but the pessimism later cripped in following the regime’s failure to resolve the cash crisis, with industry battling to source foreign currency to import raw materials.
Announcing the BCI results in Harare yesterday, CZI president Sifelani Jabangwe said the composite Business Confidence Index for the first quarter of 2018 stood at minus 14,4 for quarter-on-quarter basis and 20,9 for a year-on-year.
“This indicates lack of confidence and pessimism of business leaders for quarter-on-quarter business condition, but optimism of business leaders regarding the year-on-year economic situation,” he said.
Jabangwe told NewsDay that all the manufacturers that they surveyed complained mostly about the difficulty in getting foreign currency.
“What motivated this pessimistic result was that most manufacturers have been failing to get foreign currency for their operations to a point where their production has been greatly affected. Almost every manufacturer we surveyed complained that they were receiving little or no foreign currency so I would say it has been mainly due to foreign currency shortages,” he added.
The negative result recorded in the BCI was on a quarter-on-quarter basis against the last quarter of 2017 while the BCI year on year result was 20,9 showing an improvement compared to the first quarter of 2017.
This comes as foreign currency has remained scarce in the first quarter due to a lack of foreign investment and low exports based on low production.
Manufacturers need between $250 million and $500 million in capital to retool and increase production.
Recently, British American Tobacco described their particular situation as “drier” than other first quarters in getting forex.
Under the BCI, the Situation Diffusion Index was minus 12,2 for a quarter-on-quarter comparison and 4,5 for year-on-year comparison showing business leaders felt that the situation was worse off in the first quarter of 2018. This was compared to the previous quarter in 2017.