Ann Crotty
Chief executives across the globe are much more confident about prospects for the world economy than they were a year ago, according to the results of a survey by accounting and advisory firm PwC, which surveyed 1 344 executives from companies around the world.
Crucially for South Africa, the results of the survey reinforce the growing perception that the era of strong growth for the Brics countries of Brazil, Russia, India, China and South Africa is passing.
Although China and Brazil retain their attractions, the countries deemed to have the most inviting growth prospects are once more the US, the UK and Germany.
Among the ranks of the less developed countries Turkey, Mexico, Thailand, Indonesia and Vietnam are becoming increasingly attractive.
However Brian Molefe, the group chief executive of Transnet who was interviewed for the global survey, remains strongly optimistic about prospects for Africa.
“Among emerging markets, we think that Africa – for the first time in many centuries – is going to contribute quite significantly to global economic growth. While it’s coming from a low base, the continent is beginning to grow at about 5 percent, making it the fastest-growing region in the world,” Molefe said.
A parallel survey of 105 South African companies by PwC revealed that while local chief executives are also more optimistic about prospects for global economic growth than before, they are not as confident about their own company’s short-term prospects.
Molefe’s Afro-optimism appears to be shared with the other local chief executives as 94 percent of them confirmed that they remained focused on growing their business on the continent.
Tom Winterboer, PwC’s financial services leader for Africa, noted that the level of chief executives’ confidence about their own company’s short-term prospects varied widely by country.
A breakdown on a country-by-country basis shows that South African chief executives’ level of confidence is in line with those of western Europe.
In South Africa about 25 percent of chief executives were “very confident” about short-term prospects for their company. This compared with 53 percent in Russia, which was the highest level of confidence, 51 percent in Mexico, 50 percent in South Korea and 49 percent in India.
In the US about 36 percent of chief executives were “very confident” about short-term prospects for their company, in Germany the figure was 33 percent, the UK and Italy 27 percent, Spain 23 percent and France 22 percent.
The three big trends that are expected to transform businesses over the coming five years are technological advances, demographic fluctuations and global shifts in economic power.
Many chief executives across the globe believe that their government is not only not doing enough to support their growth prospects, but are also restricting opportunities through over-regulation. About 30 percent of them think it is part of a government’s job to foster an innovation ecosystem, with only 18 percent of them believing their government has been effective in this regard. Forty-percent say that regulation has impeded their efforts to innovate.
Expectations of government delivery seem considerably more pronounced in South Africa, with a large majority of chief executives believing improving the country’s infrastructure and creating a skilled workforce should be a high government priority.
Less than half of global executives believe these should be a priority for their government. Significantly only a third of local executives believed “ensuring financial sector stability and access to affordable capital” should be a government priority, compared with 53 percent of global executives.
A large majority of local executives said the government’s performance on most measures was “ineffective” or “greatly ineffective”.