The Private Sector Development Association-PSDA says most Small and Medium Enterprises (SMEs) are still facing challenges with their businesses as they were greatly affected by the depreciating Kwacha whose effects are now compounded with the COVID 19 pandemic.
Association Chairperson Yusuf Dodia said inflation which is almost at 15%, deteriorating exchange rates and high interest rates incurred from borrowing money from the bank have negatively affected most businesses.
Speaking in an exclusive interview with the Zambian Business Times-ZBT, Dodia said the high inflation rate means an ordinary producer of goods needs to increase prices which are pegged in Kwacha to have a meaningful return to run their businesses as the currently high inflation rate impacts on almost everything in the economy.
He also told ZBT that with the depreciating Kwacha, it means the prices of imported goods are shooting up to almost double due to buying in foreign currency.imported inflation is also affecting locally produced goods and services which have imported inputs.
“Most of our small and medium size local businesses rely heavily on either importing inputs into their business or trading, which means importing goods and then reselling them therefore with the high exchange rates, most businesses have hiked prices which affect demand and are just managing to survive, he said.”
Dodia added that small and medium size companies that are trying to borrow money from the banks or other financiers have to pay high interest, which means the prices of the products they are manufacturing or buying and selling increase too because of the high interest rates.
He also noted that loadshedding has continued to affect most businesses and with ZESCO announcing going back to the 8-12 hour loadshedding schedule, means that most businesses have to close down for half the day which impacts on the productivity and sales of the businesses.
Stakeholders have warned the government that there is urgent need to manage the macro economic fundamentals to safeguard the socio-economic wellbeing of the people. Large infrastructure projects in the absence of strong management of the exchange rate anencephaly inflation will negate the benefits accruing from the massive infrastructure projects undertaken.
