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Send  Share  RSS  Twitter  24 Jun 2014

AFRICA: Sub-Saharan AfricaÂ’s Business Confidence is Up


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Global business confidence is up, but the global economic recovery could be seriously flawed, reveal new findings from ACCAÂ’s (the Association of Chartered Certified Accountants) and the Institute of Management Accountants (IMA) Global Economic Conditions Survey (GECS).

GECS, the largest regular economic survey of accountants in the world, gauges the views of ACCA and IMA finance professionals globally, using the hands-on experiences of accountants in industry and practice to provide a truly global perspective of the economic recovery. The first GECS edition for 2014 saw global business confidence nearly cross over into positive territory for the first time in five years.

Across Sub-Saharan Africa, cash-flow and demand conditions among businesses improved significantly in early 2014, but this was not enough to boost confidence among the regionÂ’s finance professionals. Business confidence remained constant, with 33% of respondents (up from 32%) reporting confidence gains and 36% (up from 35%) reporting losses. Similarly, faith in the recovery remained broadly constant: the optimists made up 57% (up from 56%) of the African GECS sample, while the pessimists made up 41%

“Despite the pessimists, in theory, these are the best business confidence readings since the GECS began in 2009” – Karen Smal, Acting Head of ACCA South Africa

Jamil Ampomah, ACCA Director for Sub-Saharan Africa, commented: “A substantial loss of faith did occur elsewhere though. In early 2014, respondents throughout Africa were much more critical of policymakers, who, up until the Taper, were doing a good job of winning back trust. Over the last three quarter, markets in Sub-Saharan Africa along with respondents in Central and Eastern Europe, Asia-Pacific, and the Caribbean have been slowly dropping out of the global Recovery Consensus.”

Global Findings
Thirty per cent of respondents around the world were now more confident about the prospects of their organisations than they had been three months earlier, a figure unchanged since late 2013. On the other hand, 31% reported a loss of confidence, down from 34% in late 2013. More than half of the global GECS sample was optimistic about the state of their national economies, reporting that recovery was underway or about to begin. The pessimists only made up 38% of the sample, down from 42% in the previous quarter.
However, a closer look revealed a worrying picture for the economic recovery. ACCA and IMAÂ’s analysis of the influence of fundamentals on business confidence suggests that the economic recovery is flawed and has now become much more fragile.

“Since early 2013, global business confidence has become increasingly dependent on price and exchange rate stability. This trend is a sign of building financial turbulence, and has accelerated dramatically in early 2014. Financial stability is now a more significant contributor to business confidence than cash-flow and demand. Expectations of government spending and ratings of government policy also became more significant contributors in early 2014, suggesting that the recovery has been hollowed-out in early 2014 and is now over-dependent on policy.”

More information regarding GECS Q1 report can be found here:

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