Zambia’s January business activity levitated to expansionary territory after four months in the doldrums. According to a Markit Economics report, the Southern Africans January Purchasing Managers Index headlined 50.6 from 48.3 in the previous month when the private sector grappled with lack of money and persistent energy induced price pressures.
Output rose in the agribusiness and services sectors while manufacturing, construction and wholesale decreased. Fifty (50) is the benchmark of expansion (>50.0) and contraction (<50.0).
In the labyrinth of a debt restructure, Zambia’s private sector continues to be marred by currency depreciation and price pressures as petroleum prices soar. Energy bottlenecks that earlier affected business operability with 6-8 hours of load management as hydrological risks heightened, has narrowed after the power utility has resorted to importing power from Mozambique. These hurdles continue to weigh sector performance keeping the cost of doing business higher. Business sentiment was nonetheless firmest in 13 months, albeit still softer than series average.
Autopsy effects of the Russo – Ukraine war have kept global grain markets dislocated and soft commodity prices high which continue to give Zambia’s export markets a positive cue supporting output especially in the era of Kwacha weakness.
Excessive rains and floods thereof are threatening crop output and could pose a risk to Zambia’s attainment of $1 billion of farm exports after a $920 million FY2022 record. Compared to a FY22 contraction of 2.4% in agriculture credit extension, greater funding will be required to support the sector. The other sector supporting the rebound was the services faculty that continues to be the fastest growing as business seek to claw back pandemic induced dented contraction in the last 2 years.
Compared to peers price pressures are a homogenous theme across the continent with Egypts price climb the steepest in 6 years sending its PMI to 45.5 (47.2) as South Africa slid to 48.7 (50.2) as input inflation remains high and Ghana infinitesimally rose to 47.2 (47.0). Kenya expanded to an 11 month high to 52.0 (51.6) as output extended its rally and Nigeria was in expansionary territory at 53.5 (54.6) supported by resilient demand.
The Kwacha Arbitrageur
