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Business confidence suffers new setback, drops 34 points in 2015

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There is a groomy outlook for businesses in Malawi as business confidence is said to dropped by a full 34 points in 2015 to hit 65 points as local private sector companies continue to lose trust in the business environment, the latest Business Confidence Index shows.

The development comes at a time when the economy continues to sail through troubled waters with soaring interest rates, runaway inflation and a weakening Malawi Kwacha.

The report, compiled by the Malawi Confederation of Chambers of Commerce and Industry (MCCCI) is a qualitative index of scores of enterprises’ assessment of the current as well as future expectations of business climate indicators. Results of the survey were released as part of the Malawi Business Climate Survey.

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MCCCI says the indicators used in compiling the report include current performance, expected business performance, employment outlook and investment outlook.

According to MCCCI, opinions are compared to a ‘normal state’, which is a base year. An index value above that recorded in the previous year shows an improvement in the perceived confidence whilst a decline implies a perceived decline in confidence.

“Business Confidence Index for 2015 has been calculated at 65 points losing 34 points from an index of 98 for 2014,” reads the report.

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The Malawi Business Climate Survey for 2015 singled out cost of finance as the biggest obstacle of doing business in Malawi with a score of 9.7 points. Other major obstacles of doing business are electricity, telecommunications, and uncertainty in economic and regulatory policies and crime, respectively.

MCCCI President Newton Kambala said the results of the 2015 Malawi Business Climate Survey revealed that the business environment is not improving.

“As a matter of fact, the business environment is actually deteriorating. This survey, which has been conducted annually since 2004, measures and monitors the trends in the business climate in Malawi and reflects how policy and regulations impact on businesses,” said Kambala.

He observed that the results of the Malawi Business Climate Survey are not meant to downgrade the current efforts of government but are just a reflection of the state of affairs with respect to business, showing where authorities are not going well and where they are doing well.

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