PODCAST | Unpacking the African economy: A story of growth or decline?

In this edition of the Business Day Spotlight, we talk about the outlook on the economy of business leaders in Africa.

Our host, Mudiwa Gavaza, is joined by Lullu Krugel, chief economist of PwC SA, to discuss the issues.

The discussion begins by looking at new economic indicators released this week.

On Tuesday, Stats SA reported that GDP rose 4.6% in the three months to March, faster than the 3.2% median forecast of 16 economists surveyed by Bloomberg.

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In non-annualised terms, GDP expanded 1.1% in the first quarter from 1.3% in the fourth.

Krugel says these are positive signs for SA, though cautioning there is still some way to go in the recovery, given the unprecedented levels of unemployment and other factors now facing the country.

The discussion then shifts to new data from PwC about business confidence in Africa.

According to the audit firm, most African business leaders are more optimistic about the strength of the global economy and their organisations’ ability to grow revenues in the short and medium term than they were a year ago.

There is also a significant improvement in optimism over the medium term, with 42% of CEOs in Africa saying they are very confident about their revenue growth prospects over the next three years.

Despite the view that the economy will improve, Krugel says African business leaders are still cautious regarding capital allocation, which is lagging behind the rest of the world. Taking a considered approach is generally a good thing, however she hopes that such a stance will not result in lost opportunities for African businesses.

Regional integration is a main theme of the discussion as Krugel says African countries are now looking inward for their growth. Localisation has been a key point for governments, even before the pandemic, manifesting in firms looking to local banks for funding, instead of international capital pools. 

A number of SA companies have also decided to scale down their operations on the rest of the continent.

In light of the recent African Continental Free-Trade Agreement, Krugel says integration is taking place but at a slower pace than anticipated.

The discussion also focuses on GDP figures released earlier this week; President Cyril Ramaphosa’s speech on Thursday about the state of the economy; the impact of load-shedding on SA’s prospects; PwC’s recent Africa Business Agenda 2021 report; the attitude of African business leaders regarding the economy; regional integration; the impact of vaccine rollout on Africa’s economy; and an outlook for the rest of the year.  

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• Business Day Spotlight is a MultimediaLIVE production.