This Thursday, 9 November, the Confederation of Economic Associations (CTA) held the 14th edition of the Economic Briefing, which covered the performance of national companies in the third quarter of 2023 as well as the outlook from an economic point of view.
On the occasion, the president of the CTA, Agostinho Vuma, revealed that the trend in the Business Robustness Index (IRE) for the third quarter of this year was a slight improvement of 1 percentage point, standing at 29 per cent, compared to 28 per cent in the previous quarter.
“This business performance, although higher than in the previous quarter, is quite fragile. There are several reasons for this. Firstly, this year there was a late start to the agricultural marketing season due to the floods at the beginning of the year, which affected access routes and the organisation of the commercial network that sells products. When one product’s campaign goes wrong, it affects the next. Our estimates suggest that if measures aren’t taken, around 20 per cent of agricultural exports could be jeopardised,” explained Agostinho Vuma.
In addition, the head of the CTA referred to other factors that contribute negatively to the sector’s performance, pointing to the increase in financial charges with the banks.
“The successive rise in the MIMO rate from 13.25 per cent in January 2022 to 17.25 per cent in September of the same year, which has not been changed to date, combined with the rise in the mandatory reserve rate to 39 per cent, has led to an increase in companies’ indebtedness to banks. It should be noted that around 48.5 per cent of the credit granted goes to companies. Currently, the active market interest rate reached 32 per cent in September, compared to 27 per cent before the changes in monetary policy,” said the CTA leader.
In terms of employment, the confederation said that the situation remains very fragile, explaining that new jobs have been sustained by part-time or temporary hires. “We can see this situation with the increase in the rate of temporary and part-time employment, which stands at 10.3 percentage points. The demand for labour to meet the start of agricultural marketing has increased from 28% to 38.3%, largely due to harvesting and product logistics,” explained Agostinho Vuma.
The leader complained about the state’s continued accumulation of unpaid invoices to suppliers, which means that companies, mostly SMEs, are financing the state and thus limiting their growth. Public spending in such a situation ends up being adverse and damaging to the economy. “Here, we propose that the government create ceilings on the accumulation of arrears so that this spending can be controlled and monitored. This would help limit the growth of overdue invoices and increase discipline on the part of the Treasury in relation to payments to the private sector,” he emphasised.
With this in mind, the CTA proposes that the 2024 Annual Budget include a specific item for the payment of overdue invoices to suppliers of state goods and services, even if it is partial. “If you add up the accumulated value of overdue invoices at around 400 million dollars, the stock of credit to the state estimated at 4.7 billion dollars, plus the amount owed to petrol stations, you’ll see that the private sector finances the state to the tune of around 29 per cent of GDP,” he revealed.
The imminent risks associated with economic uncertainties, such as the price of oil on the international market, among other topics of interest to the private sector, were analysed on the occasion.
