TRYNESS TEMBO, Lusaka
THE business environment and consumer demand is expected to improve in the second quarter, due to the current favourable macroeconomic conditions prevailing in the country, Zambeef Products chairman Jacob Mwanza predicts.
Some of the macroeconomic fundamentals attributed to the positive business performance are the single digit inflation, stabilised Kwacha and reduced interest rates.
Currently, inflation is at 6.5 percent, interest rates are in the range of 28 to 29 percent while the Kwacha is trading around K9.30 and K9.34 on the bid and offer respectively.
Commenting on the firm’s financial results for the year ending March 31, 2017, Dr Mwanza, however, said from October 2016 to March this year, the company experienced challenges due to rising inflation, exchange rate volatility and rapid increasing interest rates.
“The challenges led to the Bank of Zambia [BoZ] being forced to introduce strict control measures to stabilise the economy such as tight control of the money supply and high interest rates led to a slowdown in consumer spending,” he said.
BoZ introduced measures such as open market operations to stabilise the Kwacha and reduced the monetary policy rate and reserve ratio, which are both at 12.5 percent.
“As a consequence of these government actions, inflation has reduced to single digit levels, the Kwacha has stabilised and the high interest rates we saw in the first half are starting to abate.
“We expect the business environment and consumer demand to improve in the second six months of this financial year…as a result of these improving economic indicators, and downward price pressure on certain consumer food products,” Dr Mwanza said.
He said Zambeef Products, which is well placed to take advantage of the improving macroeconomic conditions, will focus on the future to expand its retailing, distribution footprint, on improving margins and restoring profitability.
Dr Mwanza also said the company will continue to expand the cold chain food production capacity to meet increasing consumer demand, complete the build out of the new stock feed plant at Mpongwe and strengthen the balance sheet through the disposal of non-core assets.
“While undoubtedly, it is disappointing to report this first half performance, I have full belief that the second half will see a return to more normal trading conditions and a much improved financial performance,” he said.