Politics greatest risk in Zim — Deloitte

HARARE - Political risk is the biggest obstacle to business in Zimbabwe, according to findings of a chief financial officers (CFOs) survey by auditing and financial advisory firm Deloitte.

The Deloitte 2014 CFOs study indicated that most businesspeople were wary of operating in the country’s current political environment.

“The political landscape was named by the majority of Zimbabwean CFOs as the biggest risk to business performance,” said Roy Campbell, a partner with Deloitte, as he presented the survey in Harare today.

He said “this could be linked to the on-going nationalisation debate in Zimbabwe following President Robert Mugabe’s victory…”

“One of the election promises was a stepped-up debate and implementation of local ownership through the indigenisation programme,” the report also mentioned.

A poor credit monitoring and management process was the next major risk factor identified by the Zimbabwean professionals.

It was followed by margin deterioration due to pricing inflexibility, the threat of nationalisation and protecting market share.

The Deloitte report further noted that the Zimbabwean CFOs exhibited mixed reactions when questioned about expectations of company performance for the current year.

“No less than 19 percent of respondents predict a significant deterioration in company performance in 2014, with a further 8 percent expecting a slight deterioration and 27 percent opting for a continuation of the status quo,” Campbell said.

The remaining 46 percent reportedly expected slight to significant improvement.

According to Campbell, the CFOs identified the financial health of primary customers as the top industry concern, totalling 54 percent.

“This is a reflection of the poor state of Zimbabwe’s economy. Retail sales in Zimbabwe slumped 30 percent in February, compared to the previous month, while 15 factories in the metals and engineering industries closed in the period, according to the country’s government,” he said.

Thirty-nine percent of respondents identified government regulation as one of the top five industry concerns.

This comes as the Lynton-Edwards Stockbrokers (Les)’s latest Investor Alert report noted that the on-going succession battles in the ruling President Robert Mugabe-led Zanu PF have taken a toll on the economy, with the Zimbabwe Stock Exchange (ZSE) extending losses.

According to the Les report, the bourse experienced its worst performance in October after it tumbled by -8,89 percent, surpassing the year’s record loss of -7,13 percent registered in March.

 

 

Comments (2)

Its not surprising

TIMBA - 28 November 2014

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