After record lows, confidence begins to recover among business leaders in Africa

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YPO, the premier network of global business leaders and chief executives, last month announced that economic confidence amongst business leaders in Africa recovered slightly in the first quarter of 2016, having plummeted to a record low at the end of last year. The YPO Global Pulse Confidence Index for Africa, which tracks economic confidence levels amongst CEOs in the region on a quarterly basis, climbed 2.2 points to 53.2.

Confidence in Africa plummeted last year, declining for three consecutive quarters to 51.0 in the fourth quarter of 2015, its lowest level in the seven-year history of the survey, resulting in Africa being ranked the most pessimistic region in the world. Despite the modest increase in confidence in the first quarter of 2016, Africa still trails the global composite score of 58.3 by 5.1 points and is only ahead of one region, Latin America, in the global rankings.

The modest increase in confidence in Africa was largely due to an improved outlook in Nigeria and Kenya. Having slumped by more than 20 points since the first quarter of 2015 to 30.7 points in the fourth quarter of 2015, Nigeria climbed 8.8 points to 39.5 in the first quarter of this year. Kenya reported an increase in confidence, climbing for the second consecutive quarter to land at 61.3, up from 55.7. Amongst other major economies in the region, South Africa, which has the highest weighting in the YPO survey, remained almost unchanged, gaining 0.1 point to 55.4 after three consecutive quarters of decline.

“Clearly there is still considerable concern amongst YPO business leaders throughout Africa. Continued low oil prices, combined with the threat of a serious global economic slowdown, are affecting the outlook for CEOs across the continent,” said Manty Seligman, founder and CEO of Worldwide Capital and member of YPO Johannesburg Chapter. “Whilst these results suggest that the situation has improved somewhat in the first three months of the year, business leaders will remain risk-averse and will be closely monitoring key economic indicators before making any strategic decisions.”

Globally, in the first quarter of 2016, the YPO Global Pulse Index composite score remained steady at 58.3, reflecting a stable economic outlook. Confidence in the United States edged up 0.5 point to 59.6 whilst in the European Union, confidence rose 1.1 points to 61.6. Economic sentiment in Asia remained almost unchanged, gaining 0.3 point to 60.0, while confidence in the Middle East slipped 0.8 point to 55.6. In Latin America, economic sentiment dropped significantly by 3.6 points to 50.8.

Slightly more than a quarter (27pc) of business leaders in Africa expected that the economic and business conditions affecting their organisations would improve over the next six months. This compares with 42pc who forecasted that the economic environment would worsen, and 31pc who felt that conditions would remain relatively unchanged in the next two quarters.

Opportunities for growth

Despite concerns over the overall economic landscape, most YPO CEOs remained optimistic about their own organisations’ prospects over the next 12 months.

The YPO Global Pulse Sales Index for Africa gained 2.0 points to 63.4, with 61pc of CEOs forecasting increased revenue in the next year. Only 13pc expected sales to decline, whilst 26pc expected revenues to remain more or less flat.

The YPO Global Pulse Fixed Investment Index for Africa climbed 0.8 point to 56.7. Whilst fewer business leaders expected fixed investment levels to rise in the next 12 months, when compared to the previous quarter (41pc compared to 47pc), only 12pc of CEOs expected a reduction in fixed investment this time around, compared to 21pc in the final quarter of 2015.

Meanwhile, the YPO Global Pulse Employment Index for Africa slipped slightly for the fourth consecutive quarter, dropping 0.3 point to 52.2. Thirty percent of CEOs expected to increase headcount over the next year, compared with 17pc who expected the size of their workforce to shrink. The majority (53pc) forecasted no significant change in staff numbers, suggesting that many African economies will continue to struggle with unemployment for the rest of this year.

Global Pulse Confidence Index

The quarterly electronic survey, conducted in the first two weeks of April 2016, gathered answers from 2,209 YPO chief executive officers across the globe, including 163 in Africa.^ (Globe Newswire)

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