AFRICA

Highlighting Sub-Saharan supply chain vulnerabilities

image001.jpg

Global supply chains suffered from growing risk in Q4 2015, led by the slowdown in China’s economy, according to the latest CIPS Risk Index, powered by Dun & Bradstreet. The CIPS Risk Index, powered by Dun & Bradstreet, produced for the Chartered Institute of Procurement & Supply (CIPS), tracks the impact of economic and political developments on the stability of global supply chains. 

Bucking the trend, Sub-Saharan Africa saw a slight drop in its risk score from 5.54 in Q3 2015 to 5.53 in Q4, contributing 3.1% to global supply chain risk. The most notable contributory factors to this downward shift were macroeconomic improvements in Cote d'Ivoire, Namibia and Senegal. All three countries took measures to diversify their economies away from commodity exports to China and boost investment in transport and energy infrastructure. These countries also benefitted from budget deficits remaining under control and debt distress risks remaining low.

On the other hand, Malawi and Zambia saw their supply chain risks increase over concerns about economic instability as a result of low commodity prices and energy shortages, as well as rising domestic debt and rampant inflation.

At the regional level, risk continue to increase as the slowdown in the Chinese economy weighed on Sub-Saharan Africa’s growth in the fourth quarter of 2015. Many of the key economies in the region remain over-dependent on commodity exports to China. At the same time, large external and fiscal deficits among key regional economies are another area of concern. With a global commodities downturn, slowing growth in China and rising US interest rates, foreign investors have become more cautious about lending across the African continent. Faced with increasing interest payments, falling revenues and depreciating currencies, some countries are likely to struggle to service their debts.

Andre Coetzee, Managing Director of the Chartered Institute of Procurement & Supply (CIPS) Africa says: “The Chinese slowdown, further falls in global commodity prices, and the prospect of a rapid capital outflow as a result of the US interest rate increase are having an uneven impact on supply chain risks across Sub-Saharan Africa’s key economies. Countries which fail to take action to diversify their economies or control national debts are likely to face economic and political instability, translating into increased supply chain risks.

“For businesses in the region with international supply chains, it’s crucial to have processes and plans in place to cope with uncertainties and disruptions, from both a regional and global level.”

Oana Aristide, Interim Leader, Country Risk Services, Dun & Bradstreet says ‘’Diversification and better macroeconomic management has improved the risk outlook for a number of Sub-Saharan economies, but the region as a whole remains overly reliant on China and commodities.”

Gugu Gumede

comments powered by Disqus

RW1
R1
R1
R1

This edition

Issue 74
Current


Archive


BBQ_Magazine_SA There's still time to secure your seat at the 2018 Tomorrow's Leaders Convention https://t.co/f0axuTl1jO https://t.co/Auc621QRSj 8 hours - reply - retweet - favorite

BBQ_Magazine_SA Did you know that, according to a survey conducted by a local travel wholesaler, 67% of South Africa’s corporate tr… https://t.co/jpErWERTZv 7 days - reply - retweet - favorite

BBQ_Magazine_SA "How do we make use of existing infrastructure to improve the way we communicate content to a learner?" https://t.co/KHNKVVBzwP 8 days - reply - retweet - favorite

  • Terrence Damster
  • Zimkita Bekebu
  • Naomza Serongoane
  • Mxolisi G Waka Ndlovu