The Confederation of Mozambique Economic Associations (CTA) said yesterday morning that business performance at the national level reduced from 29% to 26% in the third quarter of 2021.

CTA says the reduction in the Business Strength Index at the national level stems primarily from the tightening of restrictions under the Covid-19 fight, rising transport costs due to the recent global logistics crisis, currency depreciation, and rising minimum wages.

As for the macroeconomic environment, CTA says that "a deteriorating trend was noted between Q2 and Q3, with the Macroeconomic Environment Index dropping by 3pp from 501TP2Q to 471TP2Q, due to currency depreciation and acceleration in inflation, in a context of maintained credit interest rates."

"Q3 2021 was also marked by legislative changes that adversely impacted the business environment, most notably the approval of the new Alcoholic Beverage and Manufactured Tobacco Sealing Regulation that impacts the worsening costs of the business sector, especially the brewing industries."

But not everything was all bad in the report on national business performance 2021. There are also positive aspects.

"We cannot fail to highlight the regulatory measures that positively impact the business environment, namely: elimination of the provisional guarantee in tenders for contracting public works and supplying goods and services to the State; approval of the instruction that imposes greater discipline in road supervision on PRM provincial commands," said Zuneid Calumia, vice president of CTA during the presentation of the report on business performance 2021.

A new chapter introduced in this report, now in its 6th edition, is the employment trends index. Here the CTA says there has been a reduction, from 111.24 to 106.46 jobs, a drop of 4.74 points.

 The CTA explains that "the fall in the employment index is explained by the unfavorable trend in the factors that represent demand for labor on the company side, namely, willingness to hire more workers, number of job vacancies, and temporary and part-time jobs."

According to CTA's business performance report, labor cost driven by the minimum wage adjustment that occurred over Q3 of this year, from an average of 8,000 Mt to 8,320 Mt, also contributed to the contraction of this indicator.

For the fourth quarter of 2021, Mozambique's largest business organization expects to see improved business performance, as it takes into account the relief of the restrictive measures to combat the Coviod-19 pandemic, announced in September, which "may contribute to the resumption of the operation of the business machine.