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African countries among fastest growing economies, South Africa below potential

Mar 30 2017 17:24
Malcom Sharara

Harare - At least nine African countries are expected to be among the 20 fastest growing economies in the world in 2017, a recent survey has shown.

According to the 2017 African Business Outlook Survey released by The Economist on Thursday, even countries that have experienced below-trend growth such as South Africa, or have fallen into recession such as Nigeria, promising commercial opportunities exist.

The report said companies with operations in Africa achieved similar or higher margins from Africa-based operations in 2016 when compared with other regions of the world.

“Companies operating in the region are already reaping rewards that compare favourably with those of their operations elsewhere,” the report said.

The survey however revealed that despite these positive commercial outcomes and prospects, operating in the region is rife with challenges.

“Respondents cited regulatory, macroeconomic, and currency- and skill -related challenges as being the areas of biggest concern.

“Moreover, respondents whose firms were headquartered outside Africa faced the additional challenge of engaging their senior management, far removed from Africa based markets, on local opportunities, with their various nuances and requirements.”

Meanwhile, according to The Economist Intelligence Unit, South Africa’s economy is expected to grow slightly faster in 2017 (1.4%), but the overall pace of expansion remains pedestrian and below potential.

“Labour rigidity, legislative and regulatory uncertainty, for example in the areas of land reform, the mining sector and black economic empowerment, as well as internal divisions in the ruling African National Congress, contribute to the slow-growth economic outlook.

While respondents expected the country’s importance as a primary market to decline over the medium term, South Africa is likely to remain a key market for their firms for at least the next five years.

“This may reflect South Africa’s importance for many companies as a springboard into the rest of the region,” said the report.

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