Category Archives: Middle East and North Africa

Business confidence in the Middle East and Africa trailing Europe

Can there be anywhere in the world less confident about its business prospects than Europe right now? Most people would answer that question with an emphatic ‘no’. But, during our recent annual conference in London, we polled the 280 delegates – from all corners of the globe – and got some contrary and interesting views.

36% of RSM members in Europe categorised business confidence in their respective countries as ‘good’ or ‘very good’. Surprisingly, both Africa and the Middle East scored lower than Europe on business confidence, despite many countries in those regions experiencing relatively high levels of economic growth. Just 25% and 22% of accounting professionals respectively in those regions rated business confidence as ‘good’ or ‘very good’.

Needless to say, business confidence is absolutely critical. If businesses do not feel optimistic, they will be reluctant to invest. As we all know, increased capital spending by private businesses will be needed to kick-start growth, but many organisations across Europe are still in cost-cutting mode.

Contrast this with Africa, where many economies are growing strongly. Confidence is relative of course, so it’s entirely possible to be less bullish despite a more favourable economic reality. The fortunes of African economies are closely tied to demand from the U.S., Europe and China, but with demand muted, and commodity prices falling, many African economies are facing growing headwinds.

Within Europe the picture is polarised. Whilst 62% of delegates from RSM Germany rated confidence as ‘good’ or ‘very good’, business confidence from UK delegates is significantly below the European average, with only the Spanish more pessimistic about their economic prospects among major European economies. Just 9% of RSM delegates from the UK ranked business confidence as either ‘good’ or ‘very good’, whereas RSM members from Spain are the most pessimistic among the five major European economies, with none rating business confidence as ‘good’ or ‘very good’.

70% of RSM members in the Americas and 66% in Asia/Asia Pacific rated business confidence as ‘good’ or ‘very good’. It’s a little surprising to see confidence in the Americas higher than Asia, but then Americans are known for their optimism, and with the prospect of energy self-sufficiency in the U.S. a growing possibility, there is good reason for feeling positive. Energy is one of the largest input costs for manufacturing businesses, so the shale gas boom could provide a much-needed competitive boost to U.S. industry.

Looking forward to 2013, 42% of RSM members in Europe think business confidence will decline over the next 12 months. Only African RSM members are less optimistic: just 25% thought confidence would improve, compared to 36% of Europeans.

RSM members have their fingers directly on the pulse of businesses in their respective countries, so this survey provides a fascinating overview of economic vitality. 2012 has been a tough year for the global economy, but there is reason to hope that the prognosis for 2013 will be a little better.

Leave a comment

Filed under Africa, Asia Pacific, Business confidence, Economy, Europe, General, Latin America, Middle East and North Africa, North America

Unrest in the Middle East and North Africa

The wave of recent events culminating in geopolitical unrest across parts of North Africa and the Middle East is having wide-ranging repercussions on these varied and complex societies. It has also led to the emergence of that great enemy of the business community – uncertainty. We have already seen short term erratic stock markets, currency movements and fluctuating oil prices. Company business plans however must look to the medium and longer term and this will prove perhaps the greatest challenge for us all.

RSM International has significant representation in the region with member firms or correspondents operating in several Middle East and North African countries including Afghanistan, Bahrain, Egypt, Jordan, Iran, Kuwait, Lebanon, Oman, Saudi Arabia, UAE and Yemen. I have been speaking with our member firms in these countries recently and whilst not all markets are impacted in the same way, there are certainly common threads.

New foreign investment and capital expenditure programmes are at higher risk now across most of the region. Questions around oil are adding to uncertainty around the world. With North Africa and the Middle East together responsible for a large proportion of the world’s oil production, any disruption in either or both areas will have a significant knock-on impact on global economies, some still fragile as they emerge from the banking and debt crisis.

Within the region, Egypt of course is a major economy and following the political upheaval, many projects in the country are currently on hold. In particular, we can see the challenges facing the banking system and the Egyptian stock exchange, at the time of writing, is still closed. However, the picture is not all gloomy. In the UAE, Kuwait and Saudi Arabia our member firms report that businesses are operating as normal. The business situation in Bahrain and Oman is also relatively stable at the moment. 

The common denominator across the region is the need for growth and jobs, especially to tackle the challenges of youth unemployment. Sound, sustainable growth is what all countries need in order to address the wider societal challenges they face  – and those of us involved in facilitating international business development will remain absolutely key regardless of how the various political changes eventually emerge.

Finally, times like these highlight the importance of good contingency planning and having a robust risk management strategy in place. In this ever-changing world, so many things can disrupt business, such as the unexpected political unrest we have seen recently, the impact of natural disasters such as volcanic ash fall out, or man-made causes such as cyber attacks.  As members of the business community, we must do our best to anticipate these scenarios and manage their impact for the good of national and regional business stability.

Leave a comment

Filed under Middle East and North Africa