Report: Africa Business Outlook 2023

The Africa Business Outlook is EICN’s annual publication that aims to help c-suite executives develop and sense-check their business plans in the African region for 2023. These findings in this report come from a survey conducted over the Q4 2022 and Q1 2023, as well as macroeconomic insights from EIU.

Africa’s growth outlook for 2023 will be dependent on a number of key factors. The combinations of economic and socioeconomic fallout from the pandemic, poor economic management, historical political legacies and external global shocks have derailed plans to significantly diversify and grow many African economies. These factors can be concentrated into five key trends that require strategic thinking from senior business leaders to overcome in the coming years.

African economic outlook for 2023

Africa’s economies are likely to face significant economic challenges throughout 2023. A combination of economic shocks since 2020 have placed many of these countries in a dangerous position, at risk from both internal, and external variables. Adverse weather conditions, global rising inflation, higher borrowing costs and weak demand from major developed countries (including Europe and China) have placed a significant drag on growth for 2023. Resource-intensive countries and major commodity exporters are likely to see revenues slow off the peaks of 2022 as the global economic slowdown begins to take effect. Commodity prices should remain elevated for much of the period that the war in Ukraine continues, and competition remains high for Africa’s resources. This will be balanced by higher domestic price pressures as international monetary tightening continues- potentially at a slower rate than last year- which will force African economies to continue to engage in their own monetary tightening. Despite this, both North Africa and Sub-Saharan Africa are expected to experience relatively solid growth in 2023. This compares with global growth expected to reach around 1.7% this year, and euro zone growth expected at 0% for the year.

When breaking this down by country, a different picture surfaces. South Africa is forecasted to grow by between 0.2 and 0.7% this year, largely as a result of weak demand and an escalating electricity supply crisis and worsened by rising interest rates. In the latest Monetary Policy Committee Statement (MPC), the Reserve Bank noted that the fallout from load shedding may deduct around 2 percentage points from this years’ growth. Similar conditions are prevalent in Nigeria, and while commodities trade and strong demand for consumer goods will support growth, but debt and spending on fuel subsidies continue to place public finances in danger. While Nigeria’s growth for 2023 is forecast at 2.7%, economic fragilities place this number at risk. Further, ongoing supply chain disruptions are affecting business plans for those investing in Africa, and are likely to affect the medium-term ability of economies to diversify.

Business leaders weigh in

The Africa Business Outlook survey was designed to gauge perceptions from c-suites around strategic and investment planning for the coming year, and will provide critical insights into the outlook for the continent by linking current macroeconomic trends with business sentiment. In our survey of c-suite business leaders based in Africa, we asked questions related to themes such as hiring, economic expectations, investment decisions and business environments. To learn more about our findings, please download the free report below.

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