Business optimism dwindling


Business optimism in Zimbabwe is fast dwindling and there are now reports that some investors may soon reduce or transfer their activities to other countries.

Analysts say other investors will drop projects with low levels of profitability. This could in turn force the government to come in and subsidise or take over these companies to try to curb the worsening unemployment crisis. It would also in turn worsen the government’s balance of payments problem as it is already struggling to cut back its excessive spending.

Even the Zimbabwe Stock Exchange, the barometer of trading in the country, is now reflecting the general downturn in the economy. About this time last year the industrial index had rocketed to over 2 700 with reports that more business people were failing to find outlets for their investment.

The index is sliding and is now around the 900 mark. Worse still there is no sign that it is stabilising.

A survey by the Confederation of Zimbabwe Industries has already indicated that there is general pessimism in the business sector mainly because of the shortage of money. This is also affecting exports since most exporters cannot take full advantage of benefits from the Export Retention Scheme because of the unavailability of money and high interest rates.

Investment intentions are at an all time low with 83 percent of those who participated in the survey saying they did not intend to spend more money on buildings and 69 percent saying they will spend less on plant and machinery.

Fifty-three percent of the respondents said they were operating below capacity and only four percent said they were operating at full capacity.

The industrial body urged the government to seriously consider providing additional non-forex related export incentives to boost the ailing morale.


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Charles Rukuni
The Insider is a political and business bulletin about Zimbabwe, edited by Charles Rukuni. Founded in 1990, it was a printed 12-page subscription only newsletter until 2003 when Zimbabwe's hyper-inflation made it impossible to continue printing.


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