Western Cape Business News

Send  Share  RSS  Twitter  06 Dec 2010

THE ECONOMY: African Trade Crucial To Growth


Recent Western Cape Business News

Businesses in Africa view an increase in the ability of skilled labourers to move between African countries, as well as an increase in knowledge sharing, trade and cooperation among African countries as some of the most important aspects to ensure the growth of businesses and economies in Africa.

This was the findings of a survey released recently and conducted by KPMG among the CEOs, COOs and CFOs of its top clients in Africa over a period of two weeks during November 2010. The aim of the survey was to evaluate the perceptions of companies in Africa on the general economic and business conditions currently being experienced.

On the back of the global economic downturn, the majority of respondents have indicated that the job losses and reduced demand for resources and export products from Africa’s trade partners have contributed to reducing Africa’s ability to increase economic growth. It is important that trade among African countries increase, for the continent to reduce its dependence on trade partners in the rest of the world that has been severely impacted by the global economic downturn,” said Carol Read, Director at KPMG.

Africa’s natural resources within the mining and agricultural sectors are considered to be the industries that will be responsible for speeding up the economic recovery in the region. On the business cost side, the impact of the electricity tariff increases seem to have dwindled, with labour costs, borrowing costs and capital expenditure being ranked the most important cost drivers in a majority of the businesses surveyed.

Businesses in Africa are also of the view that their respective governments are not striving to eradicate corruption and bribery within government. In addition, employee fraud, theft and bribery were considered to have the largest impact on the businesses surveyed.

It is encouraging to see that the majority of respondents (53%) have a clear environmental strategy in place and that the strategy is being implemented. A further 14% of businesses have an environmental strategy in place that has not been fully implemented.

A majority of respondents felt that government should be investing in energy, transport and roads infrastructure to assist business growth.

Diversification, mergers and acquisitions, and organisational expansion into Africa, developed and developing countries yielded unsuccessful results for approximately 20% of the other businesses that adopted these strategies to reduce the impact of the global economic downturn. “Increasing investment in research and development and focusing on core business objectives were the most lucrative strategies. All of the businesses who pursued these strategies yielded successful results during the economic recovery,” said Read.luded.

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