Zimbabwe’s business confidence index slumps to negative in Q1

HARARE – Zimbabwe’s business confidence index (BCI) dropped in the first quarter of 2018 to negative territory at -14.4 from 5.8 showing a lack of confidence in the operating environment that is synonymous with election periods and to an extent the worsening foreign currency shortages.

Confederation of Zimbabwe Industries president Sifelani Jabangwe said: “Since around September last year, the currency challenges have been taking a toll on industry and this really needs to be addressed.

“The decline can also be attributed to 2018 being an election year and as we draw closer to elections, weakened performance, low business confidence and reduced expectations in the economy also naturally moves with it,” said Jabangwe.

CZI has consistently assessed business conditions in the manufacturing sector on a quarterly basis since 2015. The quarterly survey aims to ascertain the views of those in charge of manufacturing enterprises regarding their situation and expectation and it measures the amount of optimism or pessimism that business managers feel about the prospects of their companies or organisations.

A change in government last November saw a boost in confidence as the new administration announced its policies aimed at opening the country up for business.

On a year-on-year basis, business managers were however optimistic that the environment would improve as the BCI stood at 20.9.

Jabangwe said the Purchasing Managers Index (PMI) stood at 50.8 points. The PMI measures five factors in business namely new orders, inventory levels, production, supplier deliveries and employment conditions with a rating above 50 indicating a growth in the manufacturing sector.

The Situation Diffusion Index (SDI) was -12,2 for quarter-on-quarter comparison and 4,5 for year-on-year comparison, indicating that business leaders feel that the situation of the first quarter of 2018 is worse off compared to the previous quarter but better compared to the same quarter of 2017.

The Expectation Diffusion Index (EDI) was -16,5 for quarter-on-quarter and 38.5 year-on-year.  Jabangwe said the EDI results indicate that business managers are pessimistic of the second quarter of 2018.

Meanwhile CZI will hold its annual congress from 26 to 28 September this year in Bulawayo.

The congress has been delayed to pave way for elections and it is expected new Ministers would be invited to the event which would run under the theme, “From dialogue to implementation – it’s time to act.”