Business confidence waning
http://www.theindependent.co.zw/
Thursday, 14 June 2012 17:44
A KEY requisite for a viable, successful and growth-oriented economy is
business confidence. When a businessman lacks confidence in the viability
and future of the economic environment in which he operates, he becomes
despondent and depressed, thereby diverting attention from the requirements
of his business.
This interferes with decision-making and stimulates myopia to circumstances
and developments which necessitate such decisions. Consequently, the doom
and gloom perceptions concerning the future of the business become
self-fulfilling prophecies.
The lack of substantive confidence in the survival and enhancement of the
economy in general, and that of the business in particular, has been a
pronounced characteristic of most of Zimbabwe’s business community for many
years. The absence of this confidence has progressively intensified that it
has wholly absorbed the minds of a great majority of the Zimbabwean
population in general.
The causes are manifold, and for a long time wholly justified the negative
perspectives of most in the business world. Many people became increasingly
convinced that there could not be, and would not be, any change to the
adverse circumstances. The ensuing pessimism has provoked continual
disbelief in any of government’s declared intents to address the negative
causes of economic depression, with the result that the business community
fails to exploit such changes to economic policies.
The negative perceptions on the economy have been caused by many factors and
developments, including:
Rampant hyperinflation that prevailed during 2006 to 2008. Inflation
soared upwards exponentially, to unprecedented global levels that exceeded
maxi-trillions per cent, virtually unmeasurable by statisticians. As a
result, most of the populace became increasingly impoverished consumers
whose purchasing power continuously diminished, thereby reducing business
revenues, whilst very severely increasing operational costs. Enterprises
which had operated successfully for many years became weaker, their asset
bases and capital resources continually eroding and becoming insufficient to
assure the survival and future viability of operations. Key factors driving
business despondency included:
Pronounced government authoritarianism and bureaucracy, including
intense exchange controls, gravely hampering importations, intensifying
operational costs, restricting crucial changes in business policies.
Decline in the productivity of employees, whose attentiveness to
effective fulfillment of their duties progressively declined as the
economic pressures impacting upon them overrode their focus on jobs, duties
and obligations. This circumstance was further compounded by many employees
peremptorily terminating service to seek greener pastures.
Intense deterioration in the provision of service by state utilities,
parastatals and local authorities. This included diminished and erratic
availability of energy, water supplies, services such as refuse removal, and
deterioration of infrastructure such as roads.
Aggressive, domineering, actions by government ministries and agencies
related to business operations, including the imposition of direct and
indirect taxation, and compliance therewith.
General inability to source funding to replace lost working capital,
with that available being at prohibitive costs, and usually available for
very limited duration.
Aggressive, irrational, and destructive pursuit of government policies
of indigenisation and economic empowerment, resulting in well-founded fears
of losses of business ownership and control, concurrently with absence of
any just and fair compensation for the enforced divestment of business
ownerships.
Endless friction and conflict within the political environment, creating
ever-increasing private sector conviction of intensifying political
instability and concommitant national unrest, with allied economic
instability.
Fears of intensifying crime including corruption, theft,
asset-misappropriation, as more and more of the population became
increasingly impoverished.
Markedly deteriorating labour relations as economic ills and hardships
intensified the demands of employees, where they had total disregard for
the inability of employers to meet such demands while retaining operational
viability.
These are but a few of many factors which have occasioned the despondency,
depression and pessimism of most of the business community to such an extent
that it has, with a few exceptions, been unable to recognise any positive
developments ameliorating the extent of the ills, and creating barriers to
recognition of opportunities to strengthen and enhance business.
But the reality is that, notwithstanding that Zimbabwe is still plagued by
many ills including continuing political instability and friction, many of
such ills have considerably diminished. Of the positive changes (which are
not receiving due recognition) is the total cessation of hyperinflation,
with Zimbabwe’s inflation levels now being considerably lower than
prevailing almost anywhere else in Africa, and very considerable relaxations
in exchange controls.
Little or no recognition is given to such positive developments, focus being
narrow-mindedly concentrated upon those ills that still exist. Therefore,
business confidence continues to wane, thereby constraining the pace of
economic recovery. All bad news is taken as fact, even if not verified,
whilst any good news is cavalierly dismissed as being devoid of foundation
and substance.
By Erich Bloch