adminLenox Lizwi Mhlanga
PEOPLE in business will tell you that no matter what the state of the economy may be, it is how you deal with the challenges that you face that builds the character of your enterprise.
In my other life as a public relations consultant, we work with clients who add value to the business environment in a way that offers qualitative feedback for decision-making.
On many occasions, we have been witnesses to businesses that have managed to survive and even thrive in adverse economic conditions because of prudent strategic decisions taken by their leaders.
It is in this vein that Access Finance, a Zimbabwean financial services business, conducted a ground-breaking Business Confidence Survey. The company provides treasury management, fixed income, bureau de change and advisory services. Its clients include “Blue-chip” Zimbabwean corporates, small to medium-sized enterprises (SMEs) and individuals.
The survey, whose results were released recently, provides an invaluable snapshot of what leading business executives in Zimbabwe are thinking. It was conducted in the last quarter of 2018.
According to the research team, 30 people from eight different industries over a three week period from November to December, 2018 were interviewed. The team that conducted the survey comprised Stephen Mashozhera, Access Finances’ head of fixed income, and Nyasha Nyatondo, the sales trader, advised by non-executive director, Jamille Jinnah.
Senior level executives that included chairpersons, CEOs and other senior executives were the ones targeted in the study. They were chosen from finance, mining, commodities, as well as manufacturing sectors. The remaining sectors were in tourism, automotive, retail and health. All voluntarily participated in the survey and their individual responses were treated as confidential and therefore cannot be identified.
In terms of business performance, the survey found that 81% of respondents experienced improvement in 2018. However, almost 18 % of respondents saw performance worsen in 2018 relative to the previous year.
The majority, that is 83 % of the respondents, recorded a substantial increase in revenues and sales. The main drivers of improved performance included the adoption of better technology, cost reduction and operational efficiency.
Despite the improved performance for many in 2018, this growth did not filter through to the jobs market. The bulk of respondents, some 66 percent, actually trimmed their permanent staff complement. This is not surprising given the low levels of employment capacity in businesses.
“We grew revenues in 2018 and if this had been another region, we would have increased our staff for the future. We are not confident in Zimbabwe yet to plan for the medium term,” says a respondent who is a CEO with an Africa regional business.
“We are not sure if this growth is opportunistic or part of a longer term trend.”
Industry seemed polarised when commenting on the growth prospects and capability to attract Foreign Direct Investment (FDI) into the country. Almost half of respondents were pessimistic on both areas, but then over 30 percent of the industry leaders were optimistic or highly optimistic that Zimbabwe would grow and attract FDI.
The respondents were asked to pick their “Top 3” sources of FDI, that is, where foreign investment was going to come from in the future. The majority, 76 % of respondents picked China in their top three while 46 % said the European Union and 36% the United Kingdom. This seemed to bode well for the government’s “Look East” policy.
The sectors leading growth, according to most of the respondents, were mining, tourism, and agriculture. These were sectors projected to drive the country’s growth in the medium to long term. This underscores the fact that Zimbabwe is a commodities-based economy. This is of concern given the expected slow-down in the growth of the Chinese economy in 2019 and a likely decline in commodities prices.
When looking into the future for their industries and individual companies, respondents were polarised in their views. Half (50%) of the respondents were optimistic or highly optimistic about their industry’s growth prospects, but 42% were pessimistic or worse. About 34% of respondents anticipated a decline in their business in 2019 relative to 2018. Whereas 41% thought the opposite and believed 2019 would bring an increase in performance.
Inadequate forex supply, rising labour costs and cash shortages were the challenges envisaged to have the most adverse impact on business performance in 2019. The availability and cost of bank credit, along with licensing and regulations, were of little concern to most respondents in 2019.
Finally, almost two thirds (64%) felt that Government policy in the past had been a negative for their business. There was more optimism that policies would work to improve business. This was despite the fact that almost 50% of respondents were still unconvinced government was on the right track to make a difference.
On the whole, businesses expressed optimism for the future. There was still a lot of work in building confidence and ensuring policy consistency. Authorities should show determination in addressing business concerns and meeting their expectations.
Online Reporter