Harare - South Africa has been ranked as the most promising market for consumer spending by the middle-class, pipping Africa’s biggest economy, Nigeria, which is ranked second, findings of a survey showed this week.
The survey, conducted by Agility Emerging Markets Logistics, also ranked Kenya and Ghana in third and fourth positions respectively, according to executives surveyed under the index.
About 1 100 executives, who responded to the survey, also mentioned that sub-Saharan Africa “remains a challenging frontier” for several other companies.
The index identifies the consumer spending sector as an equally important contributor to the region’s economic growth as mineral and commodity sectors.
Economists and experts from the International Monetary Fund (IMF) have warned African economies such as Zambia, Zimbabwe and Nigeria against heavy reliance on the commodity industry.
“The (African) market is open for first movers who can navigate risk and nurture African talent. The opportunity is for those seeking to build long-term, sustainable businesses that bring world-class practices and adapt to local conditions,” said Geoffrey White, the chief executive of Agility Africa, which compiled the index.
Driving the consumer market industry in most of the African countries is a “fast-growing middle-class”, with executives also highlighting that “poor infrastructure, lack of power generation and corruption continue to pose the most risk to African economies” and to their growth prospects.
“The results show a serious disconnect between the perception of the market and actual opportunities. Africa’s requirement for logistics services and supply chain expertise is growing every day,” added White.
South Africa’s economy is being hobbled too by lower metal prices and the IMF has cut its economic growth forecast for the continent’s number two economy to 1 percent.
A steep hike in power tariffs that is expected this year could also further worsen the situation for mining companies that already frequently have to deal with a restive labour force.
The government said the economy would grow by about 1.7 percent this year and all eyes would be on Finance Minister Pravin Gordhan and his budget statement next month.
Experts say he will likely announce growth forecasts in the region of 1.5 percent to factor in difficulties and slowing output in the country
. However, a number of economists and the IMF are forecasting economic growth this year of less than 1 percent.
South Africa is ranked at 16, followed by Nigeria at 17, as having the most “advanced logistics industry and transport infrastructure”.
The index report says South Africa’s economy is battling “power shortages, slumping commodity prices, a plunging currency and labour unrest”.
Nigeria, which registered the biggest gain by any country, was said to have “enormous potential”, while its economy – which is heavily reliant on oil – “has been hurt by low energy prices”.
Industry executives said they viewed oil prices and China’s economy as the leading risks to the global economy in 2016.
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