BUSINESS REPORTER
Listed financial services group FBC Holdings says currency volatility is threatening business viability and prospects.
Local businesses are experiencing a bumpy ride as the Zimbabwe dollar continues to lose value against all major currencies.
In a trading update for the quarter to March 31, 2023, FBC company secretary Tichaona Mabeza has asked the monetary authorities to attend to a currency conundrum to achieve economic growth amid continuous depreciation of the Zimbabwe dollar.
He said the authorities should put in place measures that promote the use of the local currency.
“…Currency instability coupled with other macroeconomic risks is posing a major threat to business viability and prospects,” Mabeza said.
He added:“Overall, we expect the monetary and fiscal authorities to continue putting in place measures to promote economic growth, currency stability and to boost market confidence for the well-being of the economy.”
Zimbabwe has adopted a multi-currency regime.
But, the United States Dollar based transactions reportedly now account for more than 70% of transactions across the country.
The government through Zimstats is now only publishing a blended inflation rate.
But many companies have rejected it when reporting their financial results saying it does not reflect the businesses state of affairs.
“The trading update is regrettably in historical terms due to the unavailability of relevant consumer price indices which facilitate reporting in inflation-adjusted terms,” Mabeza said.
In addition, the central bank also recently introduced the gold-backed digital currency that will be used as legal tender and a store of value, alongside the Zimbabwean dollar and bond notes, as part of the measures introduced to promote currency stability.
In the outlook, Mabeza expects macroeconomic risks to remain and business prospects to be under threat due to ongoing global political conflicts and the possibility of an economic recession.
“Expectations are that the responsible authorities will continue reviewing measures to mitigate these risks and stimulate economic activities.
“Recent measures announced by the Ministry of Finance are expected to stabilise the exchange rate and the economy,” he said.
The group will continue to track both local and global economic developments in its strategy formulation and risk management frameworks.
FBC will focus on improving revenue generation and diversification, whilst at the same time implementing capital preservation measures due to inflationary trends.
