Tag Archive for: GDP

South Africa’s economy has staged a solid recovery in the third quarter – with every single sector growing after the devastation of the second quarter, when the country was basically shut down in the first phase of lockdown.

Manufacturing, trade and mining saw strong growth, and there was also a notable jump in construction work, after eight straight quarters of contractions, says Momentum economist Sanisha Packirisamy.

The economy grew by 13.5% compared to the previous quarter, after a massive 17.5% contraction in the second quarter. Still, the latest GDP data shows that, after the first three quarters of the year, the South African economy was 7.9% smaller than a year ago.

Some sectors have been absolutely decimated by the lockdown and the pandemic’s impact on demand, given mass retrenchments and continuing uncertainty. The construction sector, for example, shrank by 20% in the first nine months of the year. Manufacturing (-15%) also contracted while trade, catering and accommodation – which includes the ravaged tourism and restaurant industries – shrank by almost 11%.

There are only two sectors that actually grew in the first nine months of this year: government services (+0.8%) and agriculture, which is now 11% bigger than a year ago. The sector boomed this year thanks to bumper summer crops, strong exports and solid prices.

After a lean 2019 due to foot-and-mouth disease and various droughts, good rains have fallen in many parts of the country this year. The country’s 2020/21 winter barley and canola harvests are expected to be the largest on record, while wheat production is predicted to reach a 19-year high, and the maize harvest is expected to be a third bigger than last year.

Exports of various produce have also been strong. For example, South Africa may export almost 10 billion pieces of citrus fruit this year, in what is expected to be one of the best seasons on record. This was thanks to a solid local harvest – but also strong demand, especially in Europe, for vitamin C as the coronavirus caused consumers to become more conscious of protecting their immune systems.

Maize exports increased by 235% to 963,441 tons in the third quarter, compared to the same period last year, reports Paul Makube, Senior Agricultural economist at FNB Agri-Business. “On the back of a bullish weather outlook with the La Niña pattern having taken hold above 90% chance for Southern Africa, agriculture’s outlook for the year ahead is even more positive,” says Makuba. La Niña, a weather pattern that begins in the Pacific Ocean, usually brings more rain to South Africa.

The preliminary intentions to plant report for summer crops indicates a 5% increase in planted area for the 2020/21 season to 4.15 million hectares. “This is likely to increase further in subsequent reports given the high commodity prices and better production conditions.”


For information as to how Relocation Africa can help you with your Mobility, Immigration, Research, Remuneration, and Expat Tax needs, email info@relocationafrica.com, or call us on +27 21 763 4240.

Sources: [1], [2]. Image sources: [1], [2].

Africa’s markets are never quite what they seem as revealed by the latest Nielsen Africa Prospect Indicator (APi) which shows that amidst relentless change, country prospects are stabilizing on the continent. This is evidenced by the fact that only two markets changed position on the latest APi ranking update, with Kenya remaining in top position, followed by Cote d’Ivoire.

According to the latest results Nielsen Executive Director Intelligence Global Markets Ailsa Wingfield comments; “Looking at the broader macro prospects, it is clear that Sub-Saharan Africa’s momentum will take longer than expected to flourish, with the initial 3.3% SSA GDP forecast for 2019, downgraded to 2.8%. With this slower growth comes subdued advances in consumer prosperity and demand, and business growth will need to be boosted in non-commodity dependent countries, which provide nuggets of opportunity.”

When drilling down to individual country performance, it becomes clear that top performer Kenya, is characterized by strong economic and consumer prospects, however, its business and retail prospects have deteriorated and GDP growth rates are lower with the economy losing steam in Quarter 1, 2019.

Second ranked Cote d’Ivoire’s greatest challenge is its consumer potential which weakened further in the latest quarter. Only 17% of Ivorian retailers feel that consumer spend is increasing and just 15% think that consumers are increasingly willing to try new products.

Tanzania remains steady in third place on the APi ranking with improved retail prospects although these are countered by a weaker business outlook due to restrictive investment regulations and policies.

Ghana in fourth position is forecast by the International Monetary Fund (IMF) as having one of the fastest growing economies in the world. Companies share this positive outlook, rating Ghana as Africa’s second best business prospect, with improved growth expectations. Ghanaian consumer prospects have also increased significantly, with 36% of retailers of the opinion that consumer spend is increasing, compared to only 11% a year ago.

Nigeria retains fifth place which represents its best level in the last three years, and its economic recovery is set to gain further momentum in 2019, with business prospects improving in parallel.

Business prospects

Looking at how businesses rate country growth prospects, the SSA average is moderate for the year ahead, and has remained unchanged for four consecutive quarters. Ethiopia leads the country growth expectation list followed by Ghana, Kenya, Uganda, Cote d’Ivoire and Nigeria, all ahead of the SSA average. While only six markets are regarded as having a ‘good’ growth outlook, businesses back their own growth options more highly. Own business growth expectations exceed country growth expectations in two thirds (12) of Africa’s markets.

Nigeria and South Africa show the biggest discrepancy between country and own growth outlook, where own growth expectations are markedly stronger. Companies maintain a strong conviction that these two core markets remain crucial to success and that growth is achievable despite adverse macro factors.

Consumer prospects

Africa’s consumers are marked by disparate spending intentions and purchasing pressure points. For example, Ivoirians pay 33% more than Nigerians for a common basket of goods and only 15% of Ivoirians are more willing to try products, compared to 44% of Nigerians, despite a GDP per capita of 1.6 times higher than Nigerians. Ivoirians’ purchase decisions are however not primarily based on price. They are firmly entrenched in familiarity and trust, with 84% of consumers saying they choose products with this in mind. For this reason, brand propositions must establish awareness and confidence to gain users and grow spend, not merely provide cheaper alternatives.

In Nigeria, despite higher inflation and lower incomes, consumers are adventurous when it comes to experimenting with new products which provides a window of opportunity to reach and resonate with consumers based on their more positive spending intentions.

This shows that cash constrained consumers don’t only need better price points or are risk averse, but also want value and quality assurances from those they have confidence in. Brand, marketing and retail initiatives will therefore demand very different strategies in different countries.

Retail prospects

Overall, the retailer growth outlook is the most favorable it has been in three years, with Tanzania, Cote d’Ivoire, South Africa and Uganda ahead of the average. That said, the ease of doing business remains challenging. Manufacturers therefore need to work with retailers to bolster sales through optimal stock supply, relevant product portfolios, favorable pricing points and beneficial trading terms.

Smaller players are providing formidable competition on this front in the prolific informal channels. As a result, the top 10 manufacturers account for approximately 55% of sales in Kenya, Nigeria, Ghana and Cameroon but are growing at less than 5% per annum, while smaller manufacturers are growing ahead of 15%.

Wingfield adds; “With temperate growth, business expectations are centered on core countries for success, but now more than ever, strategies need to be flexible, adaptable and focused on consumers.”


For information as to how Relocation Africa can help you with your Mobility, Immigration, Research, Remuneration, and Expat Tax needs, email marketing@relocationafrica.com, or call us on +27 21 763 4240.

Sources: [1], [2]. Image sources: Jacques Nel [1], [2].