Maputo — The Confederation of Business Associations (CTA) says that technical and financial indicators used to gauge performance of the business sector in Mozambique show an improvement of one percentage point in the Business Robustness Index (BRI) for the third quarter of 2022.
"On business performance, we note a continuous recovery of business activity in the III quarter, with the Business Robustness Index increasing by one percentage point, from 28 to 29 percent compared to the II quarter," said Vuma, at the launching ceremony of the 10th edition of the BRI for the III quarter of 2022, held this Wednesday (04), in Maputo.
This growth, according to the CTA Chairperson, Agostinho Vuma, was mainly driven by the agricultural marketing season, recovery of the transport sector following tariff adjustments and the continued recovery of the tourism sector.
According to Vuma, this performance was negatively impacted by the increase of fuel prices, lower than expected caches in the fishing sector due to high operational costs and rise of the cost of living.
He notes that employment index indicators shows a preference for hiring temporary or part-time labour, mainly in the agriculture sector, settling at 116.7 points.
As for business performance is expected to maintain an upward trend, despite the rising cost of borrowing, continued inflationary pressures, and the terrorist attacks in the northern province of Cabo Delgado.
"Instability in Cabo Delgado province may affect the desired dynamics in business activity," he noted.
Sign up for free AllAfrica Newsletters
Get the latest in African news delivered straight to your inbox
In terms of the increase in the cost of borrowing to deal with rising prices, Vuma suggest a deep reflection and adoption of more favourable conditions to improve business performance in the country.
"We need to reflect on the magnitude of tolerance to inflation and the creation of conditions to boost business performance," he said.
Recently, the Bank of Mozambique raised the Prime Rate which in January stood at 18.6 percent, which in the current month jumped to 22.5 percent, a rise of around four percentage points.
To mitigate the impact on micro, small and medium-sized enterprises (SMEs) to honour their commitments with the banks, Vuma proposes an open debate with a view to improve easing cash flow.
"I invite everyone to a frank debate on this matter that greatly affects the cash flow of business and their ability to expand their operations, taking into account that they are still recovering from the Covid-19 losses and other recent adversities," he stressed.
Lw/sg
