THE CEO Africa Roundtable has defended its recently released Business Confidence Index (BCI) that gave a score of -40,2, reflecting the attitude company executives have on the current state of the economy.
The score was calculated by averaging responses from the 257 respondents who participated in the index.
Over a week ago, CEO Africa Roundtable released its 2023 BCI in which chief executive officers and senior executives gave a vote of no confidence in the economy.
The survey report came hard on the heels of the Zimbabwe National Chamber of Commerce’s 2023 Annual State of the Industry and Commerce Survey which showed that 38% of those surveyed saw an economic improvement.
Speaking to journalists at a Press briefing last Friday, CEO Africa Roundtable chair Oswell Binha said business confidence was an essential tool to check the pulse of the businesses.
“The business confidence index serves as an essential tool for understanding market dynamics in assessing economic stability and identifying key trends that shape business decision making,” he said.
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“This business confidence index shall represent an opportunity for close interaction between policy developers and policy implementers removing the trust gap that remains a noose on the needed macroeconomic convergence in itself, a key component of national competitiveness.”
He said it was imperative that policymakers, investors and corporates harness the BCI’s outcomes as a source of real-time data, comparative analysis and predictive analytics.
“We strongly believe that this tool shall hyperbolically eradicate stakeholder suspicion, exaggeration and rhetoric, destructive culture militating against our collective intention of railroading NDS (National Development Strategy) 1 and 2 towards a prosperous upper-middle-income economy by 2030,” he said.
Looking at the main factors affecting the BCI, 79,4% of the respondents cited exchange rate volatility and inflation to be the major factor, financial stability (50,2%), regulatory environment (41,6%), and political stability (39,7%).
CEO Africa Roundtable chief economist Tatenda Nyachega said the BCI was done thoroughly through a pre-test survey and observation.
“We came up with this third quarter index. We did a second quarter index which was more like pre-testing the instrument and seeing how we were going to evolve around the issues of the BCI,” he said.
“So, what we got there and what we got from the third quarter was more official ... but on comparison from what we saw from that test run, it was a better position.”
The BCI is meant to provide information on future developments, based upon opinion surveys on developments in production, orders and stocks of finished goods in the industry sector.
The CEO Africa Roundtable hopes the index can be used to monitor output growth and to anticipate turning points in economic activity.
For decades, Zimbabwe’s economy has often remained volatile mostly due to unfavourable business policies that have taken a heavy toll on the ease of doing business and attracting investment.
Binha said Zimbabwe should create a dashboard which will be inclusive between the government and other sectors for a better interpretation of state of the economy.