Zimbabwe businesses note low activity

THE business sector has reported a decline in activity since the announcement of the 2024 National Budget  in November last year, NewsDay Business has learnt.

Most firms found the 2024 National Budget burdensome due to its high measures, headlined by an unfavourable tax system.

The president of Employers Confederation of Zimbabwe (Emcoz), Demos Mbauya, stated that companies must adapt in order to survive the tough environment.

"Following the announcement of the 2024 National Budget, we witnessed low business activity due to some of the pronounced measures," he said at the Emcoz business indaba in Harare yesterday.

"As organised business, we have engaged authorities on some of the proposed taxes which had a negative impact on business. Some of the measures have been dropped as a continuous dialogue and it is our commitment to go back to the negotiating forum and seek redress on the remaining issues.

"We are in the process of putting in place an institutional framework that will strengthen our engagement with our social partners. We need to adjust and adapt if we are to remain in business."

Mbauya said some of the issues lined up with social partners included production, bipartite social contract, current power crisis and uncertainty caused by export permits on the mining sector, review of tax measures and high interest rates, among other issues.

He noted that  Zimbabwe needed to rely on locally-produced goods and services to accelerate domestic production in the spirit of import substitution and self-sufficiency.

"We need to put in place some financial assistance to benefit companies in distress for them to be in a position to get alternative sources of power such as solar and heavy duty generators," the Emcoz president said.

"Fuel prices are to be revised downwards to reduce the current huge costs associated with operating business on full-time generators. Our fuel costs are on the high side compared to our regional counterparts resulting in us being less competitive."

The move by authorities to reduce interest rates brings relief to businesses as the associated costs of borrowing will improve access to working capital, Mbauya said.

However, he said interest rates were still high and prohibitive on lending.

"Banks are not doing their primary responsibility of lending.

"Further reduction in interest rates will increase aggregate demand which is good for business," he noted.

The indaba is being held under the theme: Resilient Business-The New Normal.