Confidence among business leaders in Africa remained steady over the third quarter of 2014, in spite of rising uncertainty around the world related to the spread of the Ebola virus in West Africa, and concerns of a global growth slowdown.
The YPO Global Pulse Confidence Index for Africa, which tracks CEO confidence levels in the region on a quarterly basis, has plateaued for the past nine months, staying put at 61.9 in the third quarter after only rising by one-tenth of a point in the second quarter. This keeps Africa in optimistic territory, trailing the global composite reading of 63.2 by a margin of just 1.3 points.
“While there were increased geopolitical risks in the third quarter coming from both inside and outside the continent, they are not yet expected to be long-lived enough to counteract the economic tailwinds of infrastructure investment and strengthening services sectors,” says Paul Berman, CEO of Cape Town-based Berman Bros Property Holdings and chair of YPO’s Africa region.
“That said, CEOs across Africa need to see important improvements in domestic policies before their business confidence can break through to higher levels.”
Globally, the YPO Global Pulse Confidence Index edged down 0.8 point on moderate declines in most regions, remaining in solidly optimistic territory at 63.2. Asia, Canada, the United States and the Middle East and North Africa regions led the way with readings above 64.0.
The European Union fell 2.5 points from its five-year high to 60.0, and the index for non-EU Europe slipped 0.9 point to 58.0. Latin America remained the weakest region for the sixth consecutive quarter, even though its confidence index improved 1.0 point to 57.3.
For Africa, lower sales outlooks offset by buoyed investment forecast. Beneath the flat overall confidence line, there were marginal adjustments in 12-month outlooks for sales and capital spending.
The sales confidence component of the Africa index dipped 0.3 point to a still-robust 71.8 in the third quarter. At the same time, the fixed investment component lifted 1.7 points to 66.5, with more than half (56%) of survey participants expecting to boost spending by at least 10% over the next 12 months. Employment confidence stayed about the same, however, with this part of the index inching up just one-tenth of a point to 57.4.
There were also variations in confidence at the country level. While confidence levels across the region as a whole remained unchanged, there were fluctuations within specific countries. South Africa, which has the highest weighting in the index, saw a drop of 1.3 points to 63.3, whilst Kenya climbed 3.7 points to 68.7 over the third quarter. Confidence in Nigeria stayed steady, inching up 0.4 point to 56.7.
The quarterly electronic survey, conducted in the first two weeks of October, gathered answers from 2,431 chief executive officers across the globe, including 152 in Africa.