PricewaterhouseCoopers say the proposal to extend South Africa's withholding tax on cross-border services, could make the country less attractive to foreign investors.
JOHANNESBURG – Accounting firm PricewaterhouseCoopers (PwC) on Tuesday said African retailers and consumer businesses were facing long-term growth prospects despite the decline in global economic growth which resulted in sharp rising prices.
PwC said the economic growth predicted for 2016 and beyond in some African countries and the growth expected in Africa’s consumer market provided major opportunities for retail and consumer companies looking into the future.
PwC presented its inaugural publication titled “So much in store” in Johannesburg on Tuesday which examines the make-up of the retail and consumer goods sector in African countries and provides an outlook for the coming five years.
The in-depth study looked at prospects in the retail and consumer goods sector in ten sub-Saharan countries including among others Kenya, Nigeria and South Africa.
Anton Hugo, leader of retail and consumer industry at PwC Africa, said Africa had risen to prominence as an investment destination over the past several years, and so the role of retail and consumer goods had taken on greater significance.
“Sub-Saharan Africa remains one of the fastest growing regions in the world and the successful expansion of a number of global and African retailers and consumer goods companies across the region speaks to the opportunities that exist,” Hugo said.
PwC said there were particular trends that would help drive the retail and consumer goods industries and also create future opportunities.
These included the rising middle-class population and rapid urbanisation, local production of goods, expansion of home-grown retailers to other markets, growing informal retail trade, optimization of supply-chain systems and distribution of goods.
PwC’s partner in Nigeria, Edafe Erhie, warned that despite this positive long-term outlook, Africa’s fortunes were very much tied with those of the global economy.
“Pressure on emerging market currencies coupled with a decline in oil and other commodity prices has seen pressure on government revenues and the ability of governments to increase social expenditure and wages in the public sector. African retailers will need to focus on their efforts on operational efficiency and managing the effect on their operations of volatile currencies,” Erhie said.
Erhie was responding to questions about tough conditions faced by South African retailers and consumer goods companies in Nigeria, including MTN, Woolworths, Tiger Brands and Truworths (which closed its two remaining stores in Nigeria this year).