Forex crisis stifles business growth

Godfrey Marawanyika

ZIMBABWEAN businesses did not record any significant growth over the past six months largely because of the unavailability of foreign currency and poor pricing strategies, a study by the

Zimbabwe National Chamber of Commerce (ZNCC) has revealed.


The study revealed that 80% of organisations interviewed had not realised any business growth from the previous year.


“From the 80%, 70% also indicated that they had not even realised any business growth from the previous six months. (At least) 10% out of that 80% have realised a marginal growth from the previous six months,” ZNCC said.


“(About) 90% said they are optimistic about the economy. Only about 70% out of those 90% are optimistic about their business. This is in line with the constraints which they are facing. Most of the business people indicated that the rate at which the economic issues are being addressed is far below the rate at which their companies are going down. That’s making them become pessimistic about their business.”


Over the past six months, business viability has been greatly compromised by lack of foreign currency and fuel shortages.


The foreign currency auction system is unable to meet demand.

A number of businesses are on the verge of closing down because they cannot access foreign currency, whilst others have been forced to reduce their staff.


Most of the companies are operating below capacity, thus increasing unit costs.


The ZNCC said current capacity utilisation in most companies was in a range of 40-50%.


“The major constraint encountered by most companies is the unavailability of foreign currency. This is followed by the unavailability of fuel, then thirdly pricing strategies,” ZNCC said.


Interest rates, taxation and the unavailability of electricity were among other constraints faced by companies.


The survey covered the manufacturing, retail and marketing sectors.


The ZNCC said most business people were citing the issue of foreign currency as a major problem, which they noted would take time to improve.


“They (business community) also alluded that the agriculture sector was not growing as forecast. This (agriculture) is the source of raw materials.”


Some indicated that corruption should be addressed with seriousness and with immediate effect.


On the clean-up campaign, the survey said that most of the firms were not affected largely because they are big and established but concerns were raised on the issue of accommodation for the affected workers adding that alternatives should be provided for those affected.