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Africa’s business confidence index a mixed bag of growth and contraction

by Business News Report

By Omoh Gabriel
A survey of trends in Africa businesses in October has shown a mixed bag. Private sector business confidence index for the African continent showed that manufacturing sector was contracting while the non-manufacturing was expanding. The survey took samples from African business professionals from 30 countries. The result of the survey showed that the Manufacturing sector confidence index was 49.7; non-manufacturing 56.9.

The Africa Business Confidence Index (ABCI) for October shows contraction in the index for manufacturing sector and expansion in the index for non-manufacturing sector in Africa. The difference compared to September in the manufacturing index is a decrease of 1.6 percentage points, and for non-manufacturing, a plus of 3.6 percentage points. The index measures business confidence in the manufacturing and non-manufacturing private sector throughout Africa. Results are published on a monthly basis. The October non-manufacturing sector results indicate confidence and growth with an index of 56.9. The manufacturing index however shows contraction for the first time this year with an index of 49.7. A level of 50 and above indicates expansion. Business professionals from 30 countries in Africa participated in the survey making the results a reliable gauge and early indicator of the underlying economic activity on the African continent.

The ABCI follows a similar methodology and logic as the PMI indices which set the global standard. Members of the Africa Business Panel are business professionals and entrepreneurs working in Africa’s private sector. On a monthly basis they are invited to report change from the previous month on the following indicators: new orders, production, employment, supplier deliveries, inventories, costumer inventories, prices paid, backlog of orders, new export orders and imports for the manufacturing sector, and similar indicators for the non-manufacturing sector. Agyenim Boateng of Wilkins Engineering in Ghana said “Africa is gradually becoming the hub of a certain business trend championed by the Asians. This has accounted for many imports into the country thereby increasing stocks and turn around times.”
On his part Mr. George Momogos of CLT in South Africa said in the survey “Africa is waiting to see what happens in the rest of the free world economically speaking. Depending on the outcome of where Europe and the US head Africa will take its next move from this.”

Malcolm Siebert of SBS International in South Africa stated “Although business activity appears to be on the rise, a cautious sentiment continues with decisions taking longer that normal. Many organisations are taking the opportunity to revisit their operational processes with a view to streamlining these wherever possible plus training and development of employees has become a priority so that when the business environment begins to normalise, they will be well positioned.”

Elaine Dugmore of Kalahari Kanvas in Botswana said “At this time of the year the level of business always decreases. With regard to exports we feel that the global uncertainty generally is causing customers to think twice before ordering. The peak season for safaris in this part of the world have also slowed down considerably – normal for this time of year.”

Aleem Saheed of Industrial & General Insurance (IGI) in Nigeria said: “Due to the financial difficulties going on in Europe and revolution in North African replacing dictatorship governments to democratic leaders, Africa is now a safe zone and an industrial comfort for the investors.”

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