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Dion Shango, CEO of PwC Southern Africa
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PwC’s Africa
Business Agenda report shows that 85% of African CEOs (Global: 85%) are
confident in their own company’s prospects for revenue growth over the next 12
months
Africa’s CEOs
are confident that the outlook for business on the continent remains positive
notwithstanding the unpredictable economic and socio-political climate. PwC’s Africa Business Agenda report shows that 85% of African CEOs
(Global: 85%) are confident in their own company’s prospects for revenue growth
over the next 12 months. Even though only 30% of CEOs in Africa (Global: 29%)
believe the global economy will improve in the next year, no less than 97%
(Global: 91%) are confident about the prospects for their own company’s growth
in the medium term.
Hein Boegman,
CEO for PwC Africa, says: “This level of optimism is the highest recorded since
we started our research on Africa CEOs in 2012. However, in the past year we
have seen a change in the outlook for some countries as external developments
impact many of the drivers of Africa’s growth.
“As countries
around the globe try to make sense of the increased levels of risk and
uncertainty that have gripped the world, Africa needs to continue rising by
capitalising on all the opportunities that lie ahead.”
The report
suggests that one of the reasons for such optimism on the Africa continent is
that CEOs have learned to look for the upside and seize on opportunities that
may arise in the face of uncertainty. In the wake of climate of muted growth,
CEOs have also acknowledged that while they focus on organic growth and cost
reductions, they also need to prioritise investment in new strategic alliances
and joint ventures to expand their markets and grow their customer bases.
According to the survey, organic growth (Africa: 80%; Global: 79%) and new
alliances (Africa: 69%; Global: 48%) are the top activities CEOs are planning
in order to drive corporate growth or profitability.
The Agenda
compiles results from 80 interviews with CEOs across 11 countries in Africa and
includes insights from business. The results are benchmarked against the
findings of PwC’s 20th Annual Global CEO survey of 1 379 CEOs in 79 countries
conducted during the 4th quarter of 2016. The Agenda provides an in-depth
analysis and insights into how businesses are adopting to meet the challenges
of operating in Africa.
Notwithstanding
the current climate and challenges, it is notable that there remains a
significant amount of potential to unlock more growth on the continent. African
CEOs are looking to international markets for opportunities, with the US (31%),
China (28%) and the UK (24%) considered the top three countries for growth.
Johannesburg (36%), Lagos (16%) and Cape Town (14%) are considered the top
three African cities for growth opportunities.
Main risks to doing
business in Africa
Although the
returns for doing business on the continent can be high, so too can the risks.
Africa’s CEOs are working in difficult times – finding the right talent for
their business, dealing with hurdles that come with working with governments,
and managing expansion plans across the continent.
In addition,
infrastructure remains a challenge as it lags well behind that of the rest of
the world. More than two-thirds of African CEOs (69%) are concerned about
inadequate basic infrastructure (Global: 54%) and a stronger focus on expanding
power supply is required to solve one of the biggest challenges in the business
environment.
Other clouds
on the business horizon include exchange rate volatility (Africa: 90%; Global:
70%); social instability (Africa: 85%; Global: 68%); geopolitical instability
(Africa: 79%; Global: 74%); unemployment (Africa: 79%; Global: 45%); and
climate change and environmental damage (Africa: 64%; Global: 50%). For most of
these factors, the level of concern among African CEOs is higher than the
global average. In addition, over-regulation features on the list of concerns
this year, with almost half (46%) (Global: 42%) of African CEOs saying they are
“extremely concerned”.
CEOs also
believe social instability resulting from inequality, an increasing tax burden,
a lack of economic diversity with an overdependence on natural resources, and
corruption remain problems in many countries.
Globalisation
Overall,
globalisation has benefitted connectivity, trade and mobility. However, just
over half of African business leaders say globalisation has done nothing to
promote equality, in particular in closing the gap between rich and poor – in
fact, this gap may well be widening.
A number of CEOs
think it is vital to address social challenges. CEOs believe the corporate
community can assist in spreading the benefits of globalisation more widely.
The majority say the best way is to collaborate, particularly with government.
“While Africa’s potential is undoubted, its achievement remains in question.
Business, government and civil society will need to work harder to turn
potential into tangible gains against the backdrop of a rapidly changing
world,” Dion Shango, CEO of PwC Southern Africa adds.
Talent and technology
The forces of
globalisation and technology are increasingly transforming the workplace. Over
half of African CEOs (53%) are exploring the benefits of humans and machines
working together in the workplace. Over a third of African CEOs (36%) are
considering the impact of artificial intelligence on future skills needs.
In some
sectors, automation has already replaced some jobs entirely. “As automation
takes deeper root in the workplace, companies in Africa will have to
increasingly focus on achieving the right cognitive re-apportionment between
man and machine,” Shango adds.
However, as
CEOs develop their services, they are finding that human interaction in the
workplace is still important and place the investment in talent as a top
business priority. Just over half of African CEOs (51%) plan to increase their
headcount in the next 12 months. Conversely, 23% plan to cut their company’s
headcount over the coming year, with more than two-thirds of expected
reductions being attributed to automation and other technologies.
According to
the survey results, no less than 80% of African CEOs (Global: 77%) see the
availability of key skills as the biggest threat to growth (ahead of volatile
energy costs and cyber threats). They are finding it particularly difficult to
source soft skills – adaptability, problem solving, creativity and leadership.
Technology & trust
Technology
has brought about a number of advancements in efficiency and the ease of doing
business in Africa. No less than 91% of African respondents (Global: 90%)
believe technology has changed competition in their industry in the past five
years.
While the
digital era offers a host of opportunities, it also creates significant
challenges and constraints in the arena of privacy and security. Organisations
are holding increasingly large volumes of personal data about their customers,
suppliers and employees. According to the survey results, 71% of African CEOs
(Global: 61%) say they are concerned about cyber threats. Furthermore, the vast
majority of African CEOs (93%) (Global: 91%) believe that cybersecurity
breaches affecting personal information or critical systems will negatively
impact stakeholder trust levels in their organisations in the next five years.
A high 96% of business leaders are also concerned that IT outages and
disruptions could impair trust in their respective industries over the next
five years.
As
disruptions gain more speed, the ability to ensure trust, security and privacy
across all interactions will become critical to businesses’ competitiveness.
But almost two-thirds of African CEOs (61%) (Global: 59%) are concerned that
they are not prepared to respond to a crisis in their business, should one
arise. “In the face
of economic and socio-political uncertainty, we remain confident that the
outlook for business in Africa remains positive. But to succeed, businesses
need to adapt swiftly to change,” Shango concludes.
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