African business confidence fell to its lowest level since October 2009 in the second quarter of 2015, this is according to YPO Global Pulse Index.
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, the region’s largest economy.
The index also showed South Africa, which has the highest weighting in the YPO survey, tumbled 5.1 points to land at 58.5, its lowest level since October 2009 and the height of the global financial crisis.
East Africa’s economic giant Kenya slipped 2.6 points, although with a score of 64.5, business leaders in the country remain firmly optimistic.
Africa’s largest economy Nigeria confidence climbed 2.3 points to 53.7, despite continued low oil prices. Zimbabwe also reported higher levels of confidence, gaining 6.0 points to land at 48.5, although this would still be considered to be 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.
The index says the region has been strained by both internal and external factors.
“African economies are being severely challenged by both internal and external factors,” said Gabriel Malan, group managing director of Unlimited Group (Pty) Ltd and the chair of YPO’s Africa Region.
“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.”
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, having been less than a point behind in the previous quarter.
Africa is the world’s second-most pessimistic region, with only CEOs in Latin America less positive about the current and future business and economic environment.
Malan added that CEOs across Africa will be looking for signs of growth and stability over the second half of the year and be closely watching key economic indicators over the coming months as they plan for 2016.
However, the index also shows two-thirds (67%) of CEOs in Africa saying they expected to increase revenues over the next 12 months, with less than one in ten (7%) predicting a decline.