Business expect better prospects in 2023

Economic players are expecting the business situation in the country to improve in the first six months of the year, according to Zimbabwe National Statistics Agency (ZimStat) survey.

ZimStat’s Business Tendency Survey Services Sector for the fourth quarter 2022, says proportions of respondents expecting the business situation to improve during the first six months of 2023 were above 50 percent for all sectors except in the Wholesale and Retail trade.

The survey collected information on views of senior executives in the selected sectors pertaining to general business situation, financial situation, access to credit, technical capacity, employment, selling prices, volume of order books and main challenges experienced.

“Proportions of respondents expecting the business situation to improve during the first six months of 2023 were above 50 percent (59,3 percent) for all sectors except in Wholesale and Retail trade at 35,7 percent,” reads part of the Survey Report.

The overall balance of opinion stood at 49.6 percentage points.

Balance of opinion is the difference between the proportion of positive responses and that of negative responses. Values of the indicator range from -100, when all responses are negative to +100, when all responses are positive.

The financial and insurance sector was more bullish, with 79,2 percent of the respondents expecting economic prospects to be better.

About seventy-four percent of respondents in the Finance and Insurance sector, anticipated the volume of demand to go up during the first quarter of 2023.

In his statement accompanying results for the full year to December 2022, First Capital Bank chairman Patrick Devenish, said while the 2023 operating environment is expected to remain challenging with stress on business arising from the broad-based currency management measures as they take full effect on the economy, the Board “remains optimistic at the long-term growth prospects of the country and the business”.

Advantage will be taken “of emerging significant opportunities across all sectors,” said Devenish.

The same sentiments were shared by Fidelity Life’s Chairman Livingstone Gwata who said “As the Zimbabwean economy continues to progress on a stable path with continued Government intervention and regulatory policies that stimulate growth, the Group is optimistic about the future”.

“We remain optimistic about future business prospects given the Group’s strong fundamentals, opportunities embedded in being part of the ZHL ecosystem . . . ,” said Gwata.

A market analyst who requested not to be named said banks have every reason to be optimistic as they are “better placed when they see the performance of their loan book which has been rapidly dollarising as are their deposits. They have also been accessing more USD credit lines.

In its statement accompanying results for the full year to December 2022, NMBZ said the bank “was successful in raising lines of credit in the previous year and we are looking forward to draw on more lines”.

“Even on ZWL they are earning massive margins.”

The accommodation and food sector was equally optimistic with 65,4 percent expecting improved economic prospects.

At least 33,3 percent of respondents from the two sectors also expected the number of persons employed by their enterprises to increase.

Both had a positive balance of opinion, with the accommodation and food sectors more optimistic.

The retail and wholesale trade sector was, however, singing the blues and was the least confident.

Only 35,7 percent of senior executives expected the economy to improve.

The sector also recorded negative net balances with respect to employment expectations at -8.4pp).

According to the survey, “cost of finance with respect to interest rates and exchange rates, was cited as the main constraint affecting the expansion of businesses in the Retail and Wholesale Trade”.

Competition in the Wholesale and Retail Trade sector was also cited as a factor.

A senior executive with a wholesale chain who spoke in confidence said the sector was being affected by informalisation.

“Businesses operating in the informal sector are getting favourable treatment from producers and manufacturers.

“Players in the informal sector are being preferred in terms of supply and also have an advantage in terms of pricing.

“Formal retailers and wholesalers are found to be too expensive and are also no longer getting favourable credit terms from suppliers that now demand prompt payment,” said the executive.

There is now a disconnect between wholesalers and manufacturers hence the pessimism, he said.

In a statement accompanying National Food’s results for the half year to December 2022, chairman

Todd Moyo said volumes were further impacted by the performance of the formal trade, due to a number of pricing-related and other distortions.

“Whilst the Group does serve the informal trade, our hope is that policy changes will be enacted to correct distortions within the formal trade to ensure that all market channels can compete on fair terms,” said Moyo.

Trigrams Investments analyst Walter Mandeya said the Wholesale and Retail Trade sector “usually has a good reading of the financial pulse of ordinary consumers and I would put greater weighting on their reading of the markets”.

“Whilst high-level infrastructure developments are taking place, there is very little trickling down to ordinary consumers who remain constrained because of a combination of high inflation, high-interest rates and general uncertainty about general pricing of utilities and basics.

“Volumes collapse when prices go up,” Mandeya said.-ebusinessweekly