<p>Key findings from the 7<sup>th</sup> ;edition of PwC’s
Africa Business Agenda 2019 report, launched at the biannual World Economic
Forum on Africa in Cape Town on September 4, shows that African business
leaders are less optimistic about the strength of the global economy and their
organisations’ ability to grow revenues in both the short and medium term than
they were a year ago. A quarter of African CEOs (25%) believe that the global
economy will decline over the next 12 months.<br>
<br>
However, much as the unease about global economic growth is also dampening
CEOs’ confidence about their own companies’ outlook in the short term, 27 % of the
CEOs state that they are ‘very confident’ in their own companies’ prospects for
revenue growth over the next 12 months. </p>



<p>In a release by Apo Group, made available to OpenLife, Dion Shango,
CEO for PwC Africa, says on the survey findings, “As they look forward to the
year ahead, African CEOs are less confident about the prospects for the global
economy than they were a year ago. The same is true when they consider the
prospects for their own organisation’s growth.<br>
<br>
“In Africa, economic and policy uncertainty, among other issues, have cast some
doubt upon business leaders’ hopes for immediate and future growth. Although
there is a drop in optimism, African business leaders do see some opportunities
on the continent – but overall, they are playing it safe.”<br>
<br>
The Agenda compiles results from a survey of 83 CEOs across 19 African
countries. The results are benchmarked against the findings of PwC’s 22<sup>nd</sup> ;Annual
Global CEO survey of more than 1 ;300 CEOs, conducted during the 4<sup>th</sup> ;quarter
of 2018. The Agenda provides an in-depth analysis and insights into how
businesses are adapting to meet the challenges of operating in Africa.<br>
<br>
Notwithstanding the current economic climate and other challenges, there is
notable optimism among business leaders about the potential to unlock more
growth on the continent. While the US, China and the UK continue to be the most
dominant traditional markets for growth opportunities, it is notable that 20%
of African CEOs ‘don’t know’ where else to look for growth and 5% say there is
‘no other country’ they would look to. The report suggests this may reflect the
current economic and political climate.<br>
<br>
<strong>Main risks to doing business in Africa</strong><br>
<br>
Ongoing economic, social and political uncertainty is a perennial worry for
CEOs globally, not least for those in Africa. Concerns over policy uncertainty,
skills shortage, over-regulation and exchange rate volatility lead the long
list of risks causing anxiety for CEOs in all regions.<br>
<br>
What stands out in these findings is that a consistently higher proportion of
African CEOs say they are ‘extremely concerned’ about these issues compared to
their global peers. While this is troubling both for businesses and the
countries in which they operate, it is noteworthy that the proportion of CEOs
who are concerned has in many cases declined since our previous survey. For
instance, 39% of African CEOs were concerned about social instability in 2019
(Global: 18%) – this was a significant improvement on the previous year’s
results (50%), suggesting that in many countries conditions are ‘less bad’ than
they were before.<br>
<br>
Africa’s CEOs’ are mostly concerned about sociopolitical and economic threats,
with 41% ‘extremely concerned’ about uncertain economic growth (Global 24%),
unemployment (Africa 33%; Global 13%); populism (Africa 33%; Global 28%),
exchange rate volatility (Africa 42%; Global 26%) and inadequate basic
infrastructure (Africa 35%; Global 17%).<br>
<br>
Of business threats, 43% of African CEOs (compared to 35% globally) said they
were ‘extremely concerned’ about over regulation, 35% (compared to 30% globally)
cited cyber threats, and 45% (compared to 34% globally) were ‘extremely
concerned’ about the availability of key skills.<br>
<br>
<strong>Trade conflicts and trade arrangements</strong><br>
<br>
It is notable that trade conflicts and protectionism do not make the top ten
list of concerns in Africa. In fact, there are a few countries in Africa that
stand to benefit from trade tensions elsewhere. While some of these issues
present barriers to business and trade, there are also fresh prospects for
revenue growth because of new trade arrangements. As the rest of the world is
embroiled in trade conflicts, African countries are looking at opening their
markets to trade. The African Continental Free Trade Agreement (AfCTA) is at
the centre of this activity. The agreement establishes the Continent Free Trade
Area – the largest in the world in terms of participating countries since the
formation of the World Trade Organisation in 1992.<br>
<br>
In general, African countries don’t trade much with each other. Currently,
trade in Africa forms less than 3% of global trade. The low trade figure is due
to several issues, namely poor infrastructure on the continent, high tariff
rates on imports, bureaucracy and red tape, and problems at border posts.<br>
<br>
“To boost economic growth on the continent, it is vital that African countries
improve trading with each other and invest in infrastructure to drive trade,”
Shango comments.<br>
<br>
<strong>Plans for growth and expansion</strong><br>
<br>
A large proportion of African CEOs (93%) are ‘somewhat confident or ‘very
confident’ about their organisation’s prospects for revenue growth over the
next three years – higher than the global average of 85%. Faced with
uncertainty around current markets, CEOs are turning inward to drive revenue
growth.<br>
<br>
African CEOs identified operational efficiencies (Africa 80%; Global 77%),
organic growth (Africa 76%; Global 71%) and the launch of a new product and
service (Africa 58%; Global 62%) as their primary drivers of revenue growth.<br>
<br>
Only 36% of African CEOs (Global 37%) said they would look enter a new market
in pursuit of revenue growth.<br>
<br>
<strong>Technological advances and data</strong><br>
<br>
The forces of globalisation and technology are transforming the workplace. A
high percentage of African CEOs (83%) ranked technological advances among the
top three trends to have transformed the workplace most in the past five years.<br>
<br>
Despite massive investments in technology, CEOs identified a vast gap between
the data they need to inform decision-making and the adequacy of the data they
receive. African CEOs say the primary reasons for this is due to data siloing
and a lack of sharing of information (Africa 59%; Global 51%), as well as poor
data reliability (Africa 57%; Global 50%).<br>
<br>
Most CEOs in Africa are taking a wait-and-see approach to the use of artificial
intelligence (AI) in the workplace – currently 35% (Global 23%) of CEOS have no
plans in place to pursue AI initiatives right now, but 46% (global 35%) have
plans to launch AI projects in the next three years. African business leaders
are looking to governments to assist with the management of AI. Most CEOs
(Africa 76%; Global 65%) believe that governments should incentivise
organisations to retrain workers whose jobs are automated by AI.<br>
<br>
Shango concludes, saying ; “As social,
political and economic events shift the boardroom, African CEOs need to step
forward to make a meaningful contribution and rebuild confidence for the long
term. Business has an essential role to play in building and fostering trust in
society and CEOs should embrace the responsibilities and trust this brings.”</p>

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