A number of listed firms reported half year results with a few having released quarterly reports. What is common between them is the fight against inflation as they battle to preserve value for their stakeholders. This therefore means no meaningful investment will come from these sectors as they play it safe.
The domestic economic situation will continue to be impacted by geo-political developments in the global economy. Positive developments within the domestic macro-environment however, signal prospects of sustainable economic growth and stability. In line with regulatory statutes, FBC Holdings Limited will continue to seek opportunities to preserve and grow shareholder value as well as enhance customer experience.
The domestic economy is projected to maintain the growth momentum in 2022 and beyond. The Government of Zimbabwe has projected 2022 GDP growth of 4.6%. Growth is expected to be underpinned by higher output in the accommodation and food services (tourism), mining, manufacturing, and construction sectors of the economy.
The Group’s strategic priority for the remaining months of 2022 is to continuously seek ways to preserve its capital from inflation-induced value erosion. In addition, a significant focus will be targeted at completing the sprints of the Organizational Transformation Programme with the goal of making happy customers through the provision of service excellence; and also enhancing group performance outturn.
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Erratic rains have characterized the 2021-22 agriculture season throwing into doubt the attainment of the projected 5.1% growth in agricultural output and, in turn, the GDP growth of 5.5% in 2022. Government has already lifted the ban on maize imports in a development that signals the country may not have adequate stocks to last into 2022-23.
Maize imports increase the demand for the scarce foreign currency resulting in some depreciation of the local currency, and the resultant increase in the foreign exchange rate and foreign currency induced inflation. The global economy is battling soaring prices as a result of supply chain disruptions caused by the COVID-19 pandemic and the Russia/Ukraine war.
The Russia/Ukraine war is further fuelling inflation as the two nations are key players on the global commodities market, in particular, crude oil, sunflower and wheat – commodities in which Zimbabwe is a net importer and is at the risk of imported inflation. The resurgence of high inflation is, in our view, the biggest threat to the economy in 2022 and the challenge on management is to ensure that revenue grows faster than costs.
That growth is set to be achieved through a combination of new financial solutions and new markets. High inflation places on us the responsibility to ensure that we preserve value for our policyholders and all stakeholders. To that end, investment portfolio diversification is a priority in the current financial year.
The overall situation facing the economy is more positive, with Government tightening up on the currency situation. The order book is full and demand continues to accelerate, with the main problem being our inability to source sufficient foreign currency for the importation of raw materials.
Although more needs to be done by the authorities to address the macro economic challenges faced by businesses, the Group remains profitable and predicts a strong finish to the financial year-end, provided that current trends continue – Harare