Local businesses in Zambia have recorded a poor performance in the quarter of the third year of 2019 due to load shedding, the kwacha depreciation and government’s delayed payments, among others, the latest Business Confidence Index (BCI) has revealed.
Speaking during a press briefing in Lusaka, Tuesday, Zambia Chamber of Commerce and Industry (ZACCI) president Chabuka Kawesha said the BCI for the third quarter ending September 30, 2019, revealed that local businesses recorded poor performances on account of heightened load shedding, the kwacha’s sharp depreciation and government’s delayed payments to its creditors, among others.
“The overall Business Confidence Index (BCI) has decreased by 32.2 points to 19.1 points in quarter three (July to September) of 2019 from the confidence of 51.3 points in quarter two (April to June) of 2019. This is according to the ZACCL across all sectors. The recorded BCI of 19.1 points, which is lower than 100 points, signifies negative sentiments about the business climate in quarter three of 2019,” Kawesha said.
“The recorded negative sentiments were mainly due to load shedding. Other factors that contributed to the negative sentiments in the business environment were depreciation of the kwacha; delayed payments by government; poor liquidity; lost contracts to supply the mines, particularly in the Copperbelt and increase in fuel prices.”
He said local businesses expected the overall performance of the economy to deteriorate going forward.
“The survey revealed that local businesses’ performance had worsened in the third quarter compared to the previous quarter due to the aforementioned reasons. Further, the survey reveals that most businesses maintained their staff in quarter three. Furthermore, most businesses experienced decreased demand for their products in the same period,” he narrated.
“With regards to effect of load shedding on production: most companies surveyed experienced reduced production by above 25 per cent due to load shedding. In terms of effect of load shedding on the cost of production, most companies surveyed experienced increased cost of production by above 25 per cent due to load shedding. With regard to effect of load shedding on workers, only few companies surveyed reduced their workers. Most of the companies that reduced their workers, reduced between one to five workers. Additionally, the survey also reveals that only few companies surveyed reduced their workers. The survey also reveals that businesses expect the overall performance of the economy to deteriorate going forward.”
Kawesha explained that the agricultural sector was the only economic area that recorded positive sentiments in the business environment with Luapula Province, which recorded positive sentiments.
“Of the 10 study sectors, only one sector (agriculture) recorded positive sentiments about the business environment. The rest of the nine sectors: mining and quarrying; manufacturing; wholesale; energy; tourism; transport and communication, social and community and construction recorded negative sentiments,” Kawesha said.
“Of the six provinces only one province (Luapula) recorded positive sentiments on the business environment. The rest of the five provinces North-Western, Central, Eastern, Copperbelt and Lusaka recorded negative sentiments.”
And he urged government to pay suppliers of goods and services timely to avoid choking local businesses.
“Government’s timely payment to suppliers of goods and services to avoid choking business; government to invest in alternative sources of energy, such as solar, wind and bio-fuel through Public Private Partnerships (PPPs). We further urge Zesco to come up with a consistent load shedding schedule to allow businesses to plan,” urged Kawesha.
The BCI is the ZACCI proprietary tool that measures the level of confidence of business executives in the business environment and predicts short-term business trends.
It simply expresses perceptions on the state of the business climate in one figure (index) with 100 points as the median, meaning that, a BCI higher than 100 points signifies positive sentiments about the business climate, and one lower than 100 points signifies negative sentiments about the business climate.