2018 set to be a defensive year for many of Knox D'Arcy's South African clients

30 Nov 17

As the economic outlook remains pessimistic for South Africa in 2017 and into 2018 our clients are turning to us to transform performance as a defensive measure, to allow them to protect margins as markets tighten and consumer spending, currently fueled by debt, is uncertain. Supply chains in most sectors are being aggressively managed to remove excess costs which feeds through t0 performance pressure on producers and importers already struggling with a weak Rand.

IOL quote Paul Noumba Um, World Bank country director, who said “South Africa’s productivity growth is diverging from global growth and the country risks falling further behind its peers. This would be to the detriment of the poor, for whom a growing economy is necessary for jobs, and a sustainable system of social grants,” Noumba Um said.

The World Bank report found that productivity in South Africa fell by 6 percent between 2007 to 2016 and attributed this to insufficient private sector investment in innovation. The report further revealed that the country’s private research and development (R&D) expenditures decreased by about 40 percent since 2009 with lower productivity growth having cost the country 0.7 percent of foregone annual GDP growth since 2008.

The response by our clients has been to partner with us to carry out profit and productivity enhancing projects, often with a focus on cost reduction, in order to ride out the storm of sluggish to non-existent growth, while wage pressure still remains higher than the market justifies.

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