Finance professionals in Africa reported further decline in confidence and prospects for businesses across the continent in the last quarter of 2013. This was the highlight of the ACCA (the Association of Chartered Certified Accountants) and the Institute of Management Accountants (IMA) in their Global Economic Conditions Survey (GECS).
GECS, the largest regular economic survey of accountants in the world, gauging the views of ACCA and IMA finance professionals globally, revealed that 35 percent of respondents in Africa reported a loss of confidence in the prospects of their organisations over the last three months, up from 33 percent in the third quarter of 2013.
Manos Schizas, ACCA’s Senior Economic Analyst, said: “Getting small businesses set up and enabling them to grow in Africa will be one of the key components to ensuring healthy recovery within the continent. SMEs are the growth engines that are fuelling African economies and creating employment.
“Business opportunities have continued to fall significantly throughout Africa in the fourth quarter of 2013, ending up very far from their peak at the end of 2012. What we’re seeing are the net effects of a heavy reliance of investment from Asia. As the slowdown in Asian economies continues to gather pace, African economies continue to feel the effects of the far-east slowdown. This is why investment in locally grown SMEs will be crucial to future prosperity.
“These developments are not surprising, as despite a small uptick in business and investment opportunities, the fundamentals in Africa have generally deteriorated. Access to growth capital, demand and cash flow conditions have consistently tightened through the second half of 2013 and continued to do so in Q4, while input prices and exchange rates destabilized further in the last quarter. GECS, now in its fifth year, revealed that at the global level, finance professionals had more faith in the strength of the wider economic recovery in Q4 2013 that at any time over the last five years: 55 percent believed conditions were improving or about to do so, up from 53% in the third quarter of 2013, while only 42 percent felt that economic conditions were deteriorating of stagnating, down from 43 percent in the previous quarter.
When it came to their own organisations, however, finance professionals’ confidence may have fallen marginally in the last quarter of 2013. About 30 percent reported confidence gains, up from 28 percent previously, but 35 percent reported losses, up from 32 percent in the third quarter. Despite this, the Q4 2013 results still represent the second-strongest year-on-year confidence gains since mid-2010. Manos Schizas said: “Sub-Saharan Africa needs to embrace enterprise. Small businesses sometime constitute virtually all the enterprises that exist in some African nations. The exception to this would be government-run organisations and few large institutions, mostly multinationals.
“With the right approach and management, SMEs are likely to develop into formidable enterprises, especially if supported by the development agencies and government to address the access to finance issues they periodically face. Also crucial for growth is not overlooking the infrastructure that markets rely on, both tangible and intangible. Payments, clearing, settlement and custody systems are crucial to ensuring the correct function of markets and connecting these systems is a prerequisite for market integration at the regional level.”
