Commercial Farmers' Union of Zimbabwe

Commercial Farmers' Union of Zimbabwe

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Business confidence waning

Business confidence waning

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 

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 

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 

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


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