Business expects economy to pick up next year

Most business executives expect the business environment to improve in 2015 and are looking to develop current key operations to keep companies  viable, an industry report has shown.

Zimbabwe revised its growth projections downwards to 3.1 percent from 6.4 percent on a weakening economy, but chief financial officers (CFOs) who took part in the survey by Deloitte – a global financial advisory firm said they expected the economy to rebound in 2015.

“Sixty- nine percent of the respondents predicted a slight improvement of company performance with 12 percent expecting a significant improvement of operation in 2015 while 15 percent expect a continuation of the status quo. Only four percent expect the situation to deteriorate even further,” said Deloitte in the report which does not mention how many executives took part in the survey.

Improving current key operations emerged as a key focus area for the CFO’s, with 86 percent of respondents naming it among their top three cash flow priorities.

“Fifty four percent of CFO’s said investing in new capacity was among their top three cash flow priorities, followed by repaying debt and retaining cash for liquidity. Payments to shareholders were among the least popular use of cash,” said Deloitte.

The report said very few companies were looking to expand their operations into the rest of Africa.

“Respondents from Zimbabwe indicated that they favor expanding within their region rather than venturing into comparatively unknown parts of the continent. Moreover, it is the minority of Zimbabwean companies that  are looking to expand into the rest of the continent at all,”  it said.

“Just 12 percent of Zimbabwean respondents indicate a desire to expand into Southern Africa while a mere four percent said they were planning to establish a presence in East Africa.”

About 54 percent of respondents  said the financial health of primary customers was a top industry concern, reflecting the poor state of Zimbabwe’s economy. Sustainability of the industry came in second at 47 percent while 46 percent pointed to competitiveness of the local market.

The bulk of the respondents represented relatively small companies with 52 percent working for entities with an annual turnover of less than $25 million. The remainder were from companies with turnovers of between $25 million and $50 million.- The Source

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