Africa’s copper producer Zambia’s energy crisis took a toll on its October private sector performance. This was measured by latest Purchasing Managers Index (PMI) headline readings for October printing at 48.3 deeper in contraction from 48.8 in September as businesses bear the brunt of the power crisis.
Commenting on the latest PMI release Victor Chileshe, Head of Global Markets at Stanbic Bank said, “The extended power cuts will have an adverse effect on business activity going forward with the cost of doing business likely to increase.”
Zambia grapples with an energy deficit of 700 MW that has seen extended load management to between 12-15 hours elevating the manufacturing cost environment as businesses resort to costly energy backups (generators) that rely on diesel for long hours. Another driver of the sharp drop in activity was lack of money in the economy signaling tight liquidity.
Energy inflation is at a high from pricier fuel costs and autopsy effects of extended blackouts. Input inflation is at highs and projected to ebb higher if the application for electricity tariffs is approved.
Business confidence nonetheless improved from the 39 month low despite being below the series average.
The Kwacha Arbitrageur