2016 was difficult year for business – ZFE

Fri, 23 Dec 2016 08:13:44 +0000

By Mailesi Banda

 THE year 2016 has been economically and socially gruelling and Zambia, like many other countries, has had its share of economic hardships, the Zambia Federation of Employers (ZFE) has observed.

The ZFE has however said it was gratifying that Government had acknowledged that Zambia was going through serious economic hardships and hoped that the year 2017 would see an improvement with the austerity measures that had been put in place.

ZFE president Tyson Chitambo said businesses had not been spared by the country’s economic slowdown and that the deteriorating exchange rate had led to Government responding by tightening money supply to slow the inflation rate.

Mr. Chitambo said this led to restricted borrowing and businesses could not even run to the financial market to ease their operational financial hardships.

“With these financial hardships that businesses experienced they resorted to undesirable cost cutting measures which included scaling down operations and laying off of workers,’’ he said.

He said the situation was not helped by the persistent power shortages which forced businesses to operate far below capacity.

He stated that the removal of subsidies and subsequent increase in fuel prices raised the costs of transportation.

“The transportation of goods and services was also affected by the introduction of road toll fees which have become a component of operational costs and makes local products less competitive both on the local and international market,’’ he explained.

Mr. Chitambo noted with concern that the Government’s plan to implement a home grown recovery plan for the economy to flourish will affect the private sector.

“Government’s focus on the recovery of liquidity at the cost of sustainability of the private sector which is the actual driver of the economy is of great concern to us,’’ he said.

On the 2017 Budget, he said it had provided few direct measures for boosting the private sector.

“The 2017 Budget has emphasised on enhancing revenue collection for the Government to stabilise Government financial standing, but given the current economic hardships that have hit us and left the Government in deficit, this might prove to be difficult,’’ he said.

He suggested that the Government needed to focus on giving the private sector room to expand rather than increase taxation on its already constricted operations.