In Part 1, respondents share their opinions about the overall environment for doing business and the issues that most directly affect their businesses’ success including the national economy, regional expansion and the availability of capital.

The major issues that are most likely to impact the success of businesses in the upcoming eleven months were identified as:

• Exchange rates - 40.6%

• Political stability (risk) – 37%

• Government policy – 34.2%

• Inflation – 33.6%

• Lack of confidence in the economy – 32.6%

Given the range of economic activities in which the respondents are engaged, the list of concerns is long and varied. In addition to those listed above other issues of major concern were: consumer spending/demand (32.4%), fuel prices (32.2%), interest rates (29.6%), taxation rates (29.2%) and profit margins (28.8%).

Areas considered of modest impact are Customs’ procedures, finding new customers/markets, smuggling and the shortage of skills.

The ranking of these issues was very similar to that of the 1999 Survey. Government policy was ranked higher than the previous year whilst new issues which were of concern were fuel prices, tax rates and profit margins. Electricity supply which was of major concern in the previous year was not considered a major concern towards the success of their company by respondents in this year’s Survey.

Very few respondents considered as significant to their company’s performance the enforcement of environmental legislation, impact of the Year 2001 computer compliance problem, the availability of bank financing, the change in the presidency, foreign dumping and media advertising rates.

 Ram & McRae’s Comments

In the last Survey four of the top five external business issues were of a financial nature. This year only two financial issues - the exchange rate and inflation - were among the top five. Risk of political instability, government policy and the lack of confidence in the economy are the other top external business issues.

The preparation of financial information was identified by the Survey group as being the major business issue affecting operations. Other principal issues identified were electricity supply, Customs procedures and improving quality.

The challenge of improving quality which was ranked as the most important issue last year was this year ranked fourth after the issues identified above.

Environmental issues were once again the least important to respondents.

On a longer term basis, the most important financial issues to companies were identified as the exchange rate, cash flow management, inflation, interest rate and the availability of foreign currency. The exchange rate and inflation are the two factors that companies are most worried about in the upcoming eleven months.

Cash flow management and inflation were given considerably more importance than they were one year ago.

On a relative basis, taxation and access to capital were not regarded as particularly significant issues facing businesses.

The little concern expressed about access to capital is very surprising as companies continue to operate from a low equity base on high cost, principally short term financing. If companies do not see access to capital as important, they are hardly likely to address it.

The Government and private sector are actively pursuing the establishment of a Stock Exchange It is perhaps not too late for the Government, through the privatisation process, to offer shares to the public.

For the second consecutive year, respondents have identified enhancing customer service as their number one priority when it comes to marketing their products and increasing sales. Other important issues identified were gaining greater market penetration and increased competition. The ranking of market penetration has dropped from the top position in 1997 to the third position in 1999.

Once again foreign competition and smuggling were considered of lesser importance.

Although smuggling was not identified as a major business issue by the respondents, it was named as one of the national issues that cause the greatest degree of pessimism about the economy.