Employers are still reluctant to hire new recruits, despite confidence among business leaders in Africa staying strong over the second quarter.
The YPO Global Pulse Confidence Index for Africa, which tracks CEO confidence levels in the region on a quarterly basis, inched up one-tenth of a point to 61.9. Africa trails the global composite reading of 64 but is firmly in optimistic territory.
While confidence levels across Africa as a whole remained unchanged, there were noticeable fluctuations within specific countries. South Africa, which has the highest weighting in the index, saw an increase of 1.7 points to 64.6, whilst Nigeria dropped 6.3 points to 56.3 over the second quarter.
“From a regional perspective, CEO sentiment softened in Africa over the first quarter, but there is still clear optimism about business and investment across the continent,” says Paul Berman, CEO of Cape Town-based Berman Bros Property Holdings and chair of YPO’s Africa region.
“Africa, however, still has work to do in developing and advancing a new business culture in which investors and entrepreneurs enjoy the freedom of opportunity to innovate.”
Globally, the YPO Global Pulse Confidence Index rebounded from a half-point dip last quarter, increasing 1.5 points to 64. The rising tide was led by a 3.9-point run-up in Asia and a 4.4-point increase in Canada.
With the exception of a marginal decline in Latin America, every region contributed to the global gain. Asia returned to its position as the world’s most optimistic region. The U.S. confidence index rose for the third consecutive quarter, to 64.8.
Key findings for Africa include:
* Sales forecasts stay robust – when asked about the prospects for their organisations over the next 12 months, business leaders in Africa remained extremely bullish. Three quarters (76%) of CEOs surveyed expected to grow revenues by at least 10% during this period.
The YPO Global Pulse Sales Confidence Index for Africa landed at a lofty 72.1, largely driven by optimism amongst business leaders in South Africa, which recorded a sales index level of 78.7.
* Investment outlooks strong – African CEOs were similarly optimistic about fixed investments and in fact registered the world’s second-highest fixed investment confidence reading after Asia. The YPO Global Pulse Fixed Investment Confidence Index for Africa rose to 64.8, 2.3 points above the global reading. More than half (55%) of those surveyed said they would boost capital expenditures in the coming quarters, up from 46% in the prior quarter.
* Employment forecasts drop marginally – in spite of their strong sales and investment plans, African CEOs expressed more reluctance to hire new workers. Only a third (34%) of African CEOs expected to increase their total number of employees in the next year, fractionally less than the previous quarter, when 37% predicted so. The majority (58%) expected to keep headcounts at current levels.