THE country’s manufacturing sector’s business Expectation Diffusion Index (EDI) remains low but there are high expectations from industry that this will grow in 2018 driven by the new political dispensation.
This is outlined in the third quarter results of a survey conducted by the Confederation of Zimbabwe Industries (CZI). Quarter on quarter, the business EDI is still negative at -21, 4 but year-on-year, it has risen to 34,4 points as businesses expect a boom in the coming year.
EDI is a measure of the present financial situation compared to the future prospects.
CZI says managers of sampled manufacturing firms, although still holding a negative perception of the operating environment, reported positive future business prospects largely due to President Emmerson Mnangagwa’s inauguration speech which was conciliatory and aimed at attracting foreign investors.
Similarly, Finance and Economic Planning Minister Patrick Chinamasa’s proposals in the 2018 National Budget statement, particularly on amending the Indigenisation and Economic Empowerment Act, have also sparked optimism among local and foreign investors. Despite the quarter-on-quarter results being pegged at -21,4, CZI believes a positive sentiment is in the offing if the business confidence boosting measures announced by Government are implemented quickly.
While the EDI has risen, the Situation Diffusion Index (SDI) remained low as business does not expect the measures announced by the new Government to have any bearing on business in the remainder of the year. Quarter-on-quarter SDI was -37,5 while year-on-year it was even lower at -45,5.
“. . . it is exciting to note that the economic outlook by the manufacturing sector has changed as a result of the new political dispensation,” said CZI president Sifelani Jabangwe while addressing journalists in Harare yesterday.
Mr Jabangwe said the measures that have created the positive perception include a commitment to avail foreign currency to productive sectors, servicing external debt, civil service reform and rationalisation, zero tolerance to corruption, curbing externalisation and mining sector development.
“The Business Confidence Index (BCI) reflects that business confidence (was) low for the third quarter performance in 2017 while expectations for the third quarter in 2018 are that business condition would have improved thereby creating an expectation of better business and economic performance.
“Expectations for the fourth quarter of 2017 are that there would be little or no change from the third quarter. This should be read with understanding that whatever pronouncements were made by the President and pronouncements in the budget statement presented by the Minister of Finance would not yet have taken effect,” said Mr Jabangwe.
As a way to keep Government and the private sector on the same page and avoid situations that can damage the economy, CZI has requested and gotten acceptance for a quarterly policy, business and economic performance review meeting between economic sector ministers and the private sector.
In the meantime, the sector has also requested a high level meeting with President Mnangagwa to discuss a raft of measures introduced by Government. Going forward, the meeting will be held periodically to keep all parties well appraised of any new developments, and give interventions where necessary.