Business leaders are cautiously optimistic about the country’s economic prospects in the year ahead —despite Government’s drive to revive the economy, an analysis of statements accompanying company financial results has shown.
While President Emmerson Mnangagwa’s decision to focus on economic issues has given business confidence a lift, with most listed entities saying they look forward to leverage on new opportunities that are being created, business leaders are ‘cautiously optimistic’ about the year ahead.
Giving their thoughts on 2018 economic prospects, several company chairmen said although they hoped President Emmerson Mnangagwa’s administration is making the right noise, its early days yet to be overly optimistic.
The general consensus is that in the short term, the market will be characterised by the same challenges that bedevilled the country in 2017.
The 2017 operating environment was characterized by nostro funding challenges, cash shortages, job losses, inflationary pressures and company closures. This was however before the events of November 2017 which ushered in a new government that has all but focused on economic recovery, raising prospects for business growth.
Business is however taking a cautious approach, with CBZ Holdings, one of the country’s biggest financial institution, being more realistic saying the benefits arising from the open environment are likely to remain subdued in the short to medium term.
Chairman Noah Matimba said although the 2018 National Budget and Monetary Statements were premised on the creation of an open environment for business “the benefits arising from the open environment are likely to remain subdued in the short to medium term due to foreign currency shortages, inflationary pressures and slow uptake to the call for new investment driven by the re-engagement process with the international community.”
Matimba’s sentiments were echoed by Innscor chairmen Addington Chinake who said currency shortages are likely to continue into the foreseeable future, a situation that has seen several businesses failing to expand their operations let alone bring in raw materials for current production levels.
This is a fear that most businesses still have. Proplastic’s chairman Gregory Sebborn said the single biggest challenge going forward will be the ability to fund raw material imports given the critical shortage of foreign currency.
He said his company, which has commenced the construction of a new and more modern factory was hoping forex challenges will not derail the project.
“Again, the major risk facing the project is the ability to fund the foreign currency component of the construction cost,” said Sebborn.
Truworths chairman Christopher Peech also expressed his fears that foreign currency shortages will derail growth despite the political changes and focus on economic recovery.
“The shortage of foreign currency is resulting in product shortages thereby limiting sales growth. The inflationary pressures are having a negative effect on consumer spend.”
Peech, however, said there is a positive sentiment in the country and hope for an improved economic environment.
Edgars’ Themba Sibanda believes the limited allocation of foreign currency to the clothing sector is of grave concern and if not mitigated will dampen growth prospects.