SHIFTING LANDSCAPES: AFRICA PROSPECTS INDICATOR, EDITION 6
Sub-Saharan Africa’s prospects improved in 2017 as global financial conditions were more favorable, commodity prices rallied, and inflation slowed helping revitalise household demand. Economic growth predictions, however, remain below pre-crisis averages and conditions are still tough, calling for coping tactics that are attuned to the times. As governments, retailers, manufacturers and consumers continue to adjust to these challenging times, individual country prospects remain in flux with seven countries changing position in the latest Africa Prospects Indicator rankings. The only country remaining firm into Quarter 4’2017 is Cote d’Ivoire, holding steady in first position, although with a smaller advantage.
Ghana moves into second position, the highest rank achieved to date, from continued advancement in the economic and consumer areas. GDP growth is at its highest level in four years and inflation continues to ease to levels last seen in 2013, relieving consumer wallet pressures and allowing for increased spend in store.
The region’s two largest economies are leading the comeback in Sub-Saharan Africa’s recovery. In the second quarter of 2017, Nigeria exited a five-quarter recession and South Africa emerged from two successive quarters of negative growth. Economic activity has picked up, albeit that growth rates remain fairly low, as crude oil and metal prices recover. Both countries improved their standing on the overall prospect ranking with improved indicators. South Africa moves into third position and Nigeria rebounds from its previous low to seventh on the ranking.
South Africa’s retail and consumer prospects are strong as retailers feel progressively more optimistic in their view on growth. The ease of doing business sentiment has risen to some of the highest levels to date, and consumer spend in store is increasing, together with a willingness to try new products. The biggest risk is the business outlook, which remains weak as a consequence of the political and administrative disorder which has slowed structural reforms and constrained private sector investment.
Nigeria’s potential remains mixed. Consumer sentiment regains positive momentum, so does the business outlook. However, the retail environment remains extremely tough, but retailer growth views are improving somewhat as inflation eases and shopper spend in store recovers.
Kenya’s stumble in the ranking continued into Quarter 4’2017, relinquishing another two places to fourth position. Deteriorating macro-economic indicators, weaker agricultural production and poor retail performance added to the woes of the prolonged and disruptive election period. Early indicators for 2018 suggest that the economy is on sounder footing, and the calmer political scene will support a more favorable year ahead.
Weaker consumer trends are also evident for Kenya’s East African neighbours, Uganda and Tanzania, who slip in the overall rankings to eighth and fifth position respectively. Retailers’ views on growth and ease of doing business are similarly at some of their lowest levels to date in both countries, despite fairly steady economic growth.
For manufacturers and retailers this points to complex challenges to achieve sustained levels of performance. Those that adapt fast, are able to meet consumer driven demand and balance distribution and operational efficiency, will succeed.
AFRICA PROSPECTS: KEY HIGHLIGHTS
The Africa Prospects Indicators integrate business, consumer and retail prospects together with more speculative macro-economic factors to bring companies closer to the consumer market realities, helping with identifying investment opportunities that will achieve maximum impact, based on the overall and relative potential.
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