YPO: African Business Confidence Slips to Six-Year Low

Confidence amongst business leaders in Africa fell to its lowest level since October 2009 in the second quarter of 2015. The YPO Global Pulse Confidence Index for Africa, which tracks CEO confidence levels in the region on a quarterly basis, slipped 3.2 points to 57.4, on the back of a sharp drop in confidence in South Africa.

After rebounding 1.3 points in the first quarter of 2015, confidence in Africa now trails the global composite reading of 60.9 by 3.5 points. Africa is the world’s second-most pessimistic region, with only CEOs in Latin America less positive.

“African economies are being severely challenged by both internal and external factors. Slow growth, weak agricultural production and commodity prices, extremely high levels of unemployment and electricity supply issues, in many countries, particularly South Africa, are clearly having an impact on confidence amongst business leaders in the region,” said Gabriel Malan, group managing director of Unlimited Group (Pty) Ltd and the chair of YPO‘s Africa Region. “CEOs across Africa will be looking for signs of growth and stability over the second half of the year and closely watching key economic indicators over the coming months as they plan for 2016.”

Of the major African economies, South Africa, which has the highest weighting in the YPO survey, tumbled 5.1 points to 58.5, its lowest level since October 2009. Kenya slipped 2.6 points; although with a score of 64.5, business leaders in the country remain firmly optimistic. Nigeria confidence climbed 2.3 points to 53.7, despite continued low oil prices. Zimbabwe also reported increased confidence, gaining 6.0 points to land at 48.5, although still in pessimistic territory.

Globally, the YPO Global Pulse Confidence Index slipped 0.6 point to land at 60.9, its lowest level since October 2013. This decline in confidence was evident in all of the major economic regions, with the United States falling 0.5 point to 62.8, Asia dropping 1.6 points to 62.0, and the European Union slipping 0.9 point to 61.6.

Confidence levels amongst African business leaders dropped across the survey’s key indices — sales, employment and fixed investment. Even so, there were still some signs of encouragement. The YPO Global Pulse Sales Index for Africa dropped 1.0 point to 68.8, still an extremely positive reading. Two-thirds (67%) of CEOs in Africa expected to increase revenues over the next year, with only 7% predicting a decline.

Interestingly, there were mixed feelings in regards to the short-term expectations in the region. Thirty percent of CEOs said business and economic conditions would improve over the next six months, 31% expected conditions to deteriorate and 39% believed that conditions would remain the same.

YPO Global Pulse Confidence Index

The quarterly electronic survey, conducted in the first two weeks of July 2015, gathered answers from 2,127 chief executive officers across the globe, including 181 in Africa. Visit www.ypo.org/globalpulse for more for more information about the survey methodology and results from around the world.