Southern African CFOs cautious about future market outlook - CNBC Africa

Southern African CFOs cautious about future market outlook

Southern Africa

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“If you look at their views on GDP, the South African CFOs are saying between three and 3.7 per cent over the next two years, which interestingly is higher than most economists out there. The Southern African CFOs surveyed outside of South Africa have got a better view, and they’re saying it’s going to rise between about five and 5.7 per cent,” Deloitte Consulting director Rodger George told CNBC Africa on Thursday.

“So the first key pillar that CFOs are saying is we expect growth in the economy, the second thing is they are expecting great growth in the performance of their companies. If you look at what they were saying last year, the majority of CFOs have said we did as we expected and in fact better.  Staggeringly 85 per cent of CFOs are saying in the next year we will do better than we did this year.”

Chief Financial Officers’ (CFO) views on interest rates are were stable, with almost 60 per cent explaining they expected rates to remain stable. They also had a stable view on currency performance.

 “Given those fundamentals, one would expect that you see expansionary strategies, but when we look at the strategies and the cash flow intention of CFOs out there, it’s very much conservative, focusing on retaining cash for liquidity,” George explained.

“Also focusing on internal cost-cutting, improving processes and systems, the sort of stuff you would expect toward the bottom end of the scale around innovation, research, new markets much lower down. They’ve been behaving cautiously but the fundamentals that they’re telling us are quite strong and should indicate the opposite.”

Top on the agenda in terms of future risk for South African CFOs was the current political context and landscape, which has been played a crucial role on their sentiment.

Concerns about corruption, the government failing to get the budget deficit under control and the union and labour activity’s knock on the market were also prominent factors.

“Interestingly, we run a similar survey across the UK and Europe CFOs, and for the first time in the last quarter, those CFOS are expressing their highest levels of optimism since the recession,” said George.

“So what we have is CFOs in the markets that we’re concerned about having a much better view of the outcome of those markets and in fact sentiment, according to our survey there, is at its highest levels since recession. So it’s almost as if we’re lagging slightly in terms of our views of risk.”

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