Business Confidence in Zambia drops in 3rd Quarter

PRESS BRIEFING ON THE BUSINESS CONFIDENCE INDEX FOR THIRD QUARTER OF 2018

Tuesday 20^th November, 2018, Lusaka.

BUSINESS CONFIDENCE INDEX FOR THIRD QUARTER OF 2018

Business Confidence Index (BCI) is the ZACCI proprietary tool that measures the level of confidence of business executives in the business environment and predicts short term business trends. It simply expresses perceptions on the state of business climate in one figure (index) with 100 points as the median. A BCI higher than 100 points signifies positive sentiments about the business climate and a BCI lower than 100 points signifies negative sentiments about the business climate. It is calculated out of current business moods and expectations for the future.

BCI FOR THIRD QUARTER 2018 SUMMARY

Business Confidence Index (BCI) has substantially decreased by 75.6 points to 92.9 points in Quarter 3 (July to September) of 2018 from the confidence of  168.5 points in Quarter 2 (April to June) of 2018 according to the ZACCI Business Confidence survey conducted on 102 members of ZACCI across all sectors. The recorded BCI of 92.9 points which is lower than 100 points signifies negative sentiments about the business climate in Quarter 3, 2018.

This was mainly driven by the depreciation of the Kwacha, low sales due to seasonal demand, delayed payments by Government and poor liquidity. Other factors attributed to the decline in BCI were future expectations that fuel hike would further increase the cost of doing business.

The survey reveals that the performance of business has worsened in Quarter 3 of 2018 compared to Quarter 2 of 2018 due to the aforementioned reasons. Further, the survey reveals that only few businesses employed more staff in Quarter 3 of 2018. Furthermore, the survey reveals that the cost of doing business has increased in Q3 of 2018 compared to Q2 of 2018.

Additionally, the survey indicates that the replacement of VAT by Sales Tax would negatively affect business and VAT refunds especially in the mining sector.

RECOMMENDATIONS

• Government should speed up the process of dismantling arrears to avoid chocking business.
• Government to conduct thorough consultations with various stakeholders before implementing the Sales Tax.

The next BCI results (for Quarter 4) will be released in January, 2019.