ZAMBIA’S PRIVATE SECTOR EXPANDS

By BUUMBA CHIMBULU ZAMBIA’S private sector pulse has expanded for the first time in 26 months after two years in contraction zone. The country’s private sector pulse for the month of April 2021 expanded to 50.1 from 49.7 recorded in March as measured by Market Economics Purchasing Managers Index (PMI) prepared by Stanbic Bank Zambia. Victor Chileshe, Head of Global Markets at Stanbic Bank, said: “the PMI has recorded a reading of 50.1, the first above the 50.0 benchmark in 26 months indicating that business conditions have improved in the last months as evidenced by new orders returning to growth thereby ending a 25-month sequence of decline.” Zambia has been in stagnations for 25-months straight weighed by currency weakness fuelling input inflation, energy bottlenecks causing power rationing and more recently, Covid-19 pandemic effects that suppressed consumer demand in addition to disrupting supply delivery chains. The latest PMI however indicates that there were signs of improvement in the private sector during the month of April 2021. “In particular, new business expanded for the first time in 26 months amid strengthening market conditions.  “This helped lead to the slowest fall in activity in more than two years and renewed growth of input buying,” the PMI indicated. According to the PMI, new orders returned to growth in April, thereby ending a 25-month sequence of decline. It indicated that those firms that saw new business expand often linked this to signs of improving market conditions. “Although companies continued to lower their output, the rate of decline was only marginal and the softest in the current 26-month sequence of contraction. The Covid-19 pandemic and currency weakness were behind the fall in output,” the PMI indicated. The survey indicated that signs of improvement in customer demand encouraged companies to expand their purchasing activity for the first time since February 2019, with inventories also increasing accordingly. Restrictions due to the Covid-19 pandemic meant that suppliers’ delivery times continued to lengthen, but the rate of deterioration in vendor performance was the least pronounced in 14 months.