AfricaNews: Explain in simple terms what the Africa Business Confidence Index means

Bas Vlugt: Using a widely accepted international survey methodology, managers working in the private sector in Africa-based companies are asked to assess their businesses’ performance based on a comparison of the current month to the previous month. The survey centres around the following indicators: new orders, production employment, supplier deliveries for the manufacturing sector and similar indicators for the non-manufacturing sector. Survey respondents are asked if the level is “better/higher”, “same”, or “worse/lower” than the preceding month. The resulting indices measure the rate and direction of change, if any, for each surveyed activity. Because 955 private sector business men/women from 42 countries submitted the survey, the results are a reliable gauge and early indicator of the underlying economic activity on the African continent. This is the first time ever such a pan-African business confidence index has been compiled.

AfricaNews: What motivated the need for the Africa Business Confidence Index?

Bas: Africa is a continent with a business environment that is rapidly gaining strength. Whereas such indices exist in more developed markets and for South Africa already, no such index exists for Africa as a whole. Because it is deemed to be a reliable indicator for underlying economic activity, the Africa Business Panel believes it is appropriate to issue these survey results because it will contribute to the outlook and reputation of Africa as a place to do business.

AfricaNews: There are more than one indexes and reports on doing business in Africa, what makes the ABCI different?

Bas: The ABCI indices measure business confidence which is forward looking by nature. Most existing data coming out of Africa is often outdated or uses a methodology that is not accepted internationally. And is based on a relatively small number of respondents. The ABCI is the first survey to use the internationally recognized ISM methodology and make use of a pan-African database of more than 30,000 private sector managers.

AfricaNews: How do you think the Index could influence decisions at the manufacturing and non-manufacturing private sector?

Bas: It will help business managers, policymakers and governments to better understand pan-African macro-economic trends and forecasts and provide reliable data which is often still in short supply in sub-Sahara Africa.

AfricaNews: What does the Index mean to an investor yet to do business in Africa?

Bas: Given the fact that the survey response comes from 42 countries, it is a reliable indication of the short- and medium-term business confidence across the whole of Africa. Africa Business Panel offers additional services to businesses who want to purchase more in-depth information on trends in certain regions, countries or business sectors across Africa. This could help to make more informed investment decisions.

AfricaNews: What do you hope to achieve with the ABCI in the coming years?

Bas: As the number and quality of survey participants increases, results will become ever more reliable and serve as a useful tool for the private sector, governments and multi-lateral institutions alike.

Click for maiden Index report

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First Africa Business Confidence index out