Menu

The YPO Global Pulse Confidence Index for Africa, which tracks economic confidence levels among CEOs in the region on a quarterly basis, remained relatively stable for the second consecutive quarter of 2016, according to YPO, a global network of young chief executives.

The latest index, which was released on Tuesday, shows confidence among African business leaders to be stable, climbing 0.6 point from 53.2 in Q1 to 53.8 points in Q2. The index had dropped to a record low of 51.0 at the end of last year.

For the YPO Global Pulse Confidence Index for the second quarter of 2016, the organization interviewed 2,389 of its member-CEOs across the globe, including 162 in Africa. YPO has a network of 24,000 members who employ 15 million people around the world and generate about $6 trillion in annual revenues.

The survey found that CEOs generally expect challenging conditions to remain for the rest of 2016. Almost one-third (32%) of CEOs predicted economic and business conditions would deteriorate in the second half of this year, compared to 27% who expect to see an improvement.

But despite concerns over the wider economic climate, many business leaders in Africa believe there are opportunities for growth within their own organisation. Almost two-thirds (64%) of CEOs predicted an increase in sales in the next 12 months, while 13% expect sales to decline. Only 61% of respondents forecasted an increase in sales in Q1 2016.

30% of CEOs said they expect to increase workforce over the next year, compared to 15% who anticipate that their workforce would be reduced. There is also a slight improvement with this indicator relative to the first quarter of 2016 when 17% predicted a reduction in their workforce.
 
According to YPO, the stabilisation in economic confidence in Africa is largely due to a more positive outlook among CEOs in South Africa and a significant rebound in confidence in Nigeria. The YPO Global Pulse Index for South Africa rose 2.1 points to 57.5, suggesting that South African business leaders are beginning to see signs of improvement and stability in the economy. However, South African confidence remains considerably weaker than it was pre-2015, when the confidence index stayed above the 60-point mark for more than five years.

Meanwhile, the YPO Global Pulse Index for Nigeria jumped a remarkable 14.5 points to 54.1 in the second quarter of this year, after plummeting in 2015 to a record low of 30.7. YPO said economic confidence in Nigeria has recovered significantly following modest increases in oil prices and a period of relative stability in the country.

Elsewhere, Kenya suffered a sharp drop in confidence, declining 9.9 points to 51.4. While Zimbabwe's index gained 1.4 points, confidence remained in pessimistic territory at 40.1.

“Evidently, economic confidence among business leaders in Africa differs sharply by country, but it’s true to say that every CEO in Africa remains concerned to some degree about economic conditions at both the country and regional levels,” said Glenn Gamsy, Managing Director of GIB Financial Services, and YPO Johannesburg chapter education officer.

“However, there are some signs of encouragement, with oil prices beginning to recover and indications that the global economy may be more stable than was feared six months ago when there were major question marks. CEOs will be hoping for a period of stability and growth in the second half of the year, giving them greater confidence to plan and invest for 2017,” added Gamsy, who is also Principal Officer of Destiny Retirement Funds.

Worldwide, the YPO Global Pulse Index for the second quarter of 2016 rose 1.4 points to 59.7, its highest level for a year. This means the business confidence in Africa is still weaker than at the global level, as the regional index for Africa is seen to trail the global index by 5.9 points. According to YPO, the stabilisation in economic confidence masks the fact that Africa remains the most pessimistic region in the world.
 
In line with Africa, most regions around the world enjoyed a modest increase in confidence levels, with the notable exception of the European Union, where confidence eroded following the Brexit referendum result in the United Kingdom. Business confidence in the region declined 3.1 points to 58.5, its lowest score for three years.

Asia gained 2.9 points to reach 62.9, making it the most confident region in the world. The United States climbed 1.2 points to 60.8, its highest level for a year. Latin America also rose 3.6 points to 54.4. The Middle East and North Africa remained almost unchanged, edging up 0.3 point to 55.9.