Govt contractor Masimba confirms economic instability in Zimbabwe
Masimba Holdings, a prominent contracting and industrial group, which gets several government contracts especially in road construction, has implored authorities to urgently implement corrective measures to restore economic stability in the market.
In its update for the quarter ended 31 March 2023, Masimba said the first quarter of 2023 commenced on a good note with month-on-month inflation slowing down to 0.99% in January.
The company, however, said the gains realised were reversed towards the end of the quarter due to an upward trend in inflation which resulted in year-on-year inflation closing at 87.6% (2022 72.7%).
“The use of multiple and ‘uncontrollable’ alternative market exchange rates in the economy has contributed to the deterioration of inflation levels which continued status quo has the potential of threatening the viability of long-term infrastructure developments,” read the notice signed by Pearl Mutiti, the Company Secretary.
On performance review, the Group’s revenue volumes were ahead of the comparable period by 18%.
The group said this was “driven by a strong and firm order book in the Roads and Earthworks, Mining and Energy sectors. Profitability in the period remained stable owing to cost containment strategies being implemented by the Group.
“Capital expenditure incurred in the period under review amounted to USD2.783,773 (2022: USD3,571,713). The Group’s liquidity position was satisfactory. The Zimbabwe National Statistical Agency will, in the current year, only issue blended Consumer Price Index (CPI)statistics.
“The adoption of the blended CPI statistics for purposes of presentation of financial statements may not be appropriate, the full impact of which will be assessed at the Group’s half year reporting ending 30 June 2023.
“The Group’s Safety, Health, Environmental and Quality Management systems performed satisfactorily in the period under review.”
The group said it anticipated that the operating environment would remain difficult owing to distorted pricing distortions emanating from exchange rate disparities in the market.
Accordingly, the company urged the government to quickly institute measures to restore the economy.
“The macro-economic environment is forecast to remain constrained on the back of a contractionary fiscal policy and continued pricing distortions emanating from exchange rate disparities in the market.
“We implore the authorities to urgently implement corrective measures to restore economic stability in the market,” the group said.
“The Group has a firm order book with tenures of between six to eighteen months. The order book is spread over the Roads and Earthworks, Mining and Energy sectors. However, execution of the order book may be negatively impacted by the prevailing volatility in the current macro environment.”