African bosses share bullish view
Share this article:
Johannesburg - Africa’s top chief executives are optimistic about growth despite volatility and uncertainty on the continent, according to consultants PricewaterhouseCoopers (PwC).
Suresh Kana, the senior partner for Africa at PwC, said: “Chief executive officers in Africa feel more positive about their ability to generate revenue growth and about prospects for the economy now that they are emerging from the global financial recession.”
The Africa Business Agenda 2014 report was released on Thursday.
It compiles results from surveys and interviews with 260 chief executives in Africa and includes insights from business and public sector leaders from 18 countries.
It includes interviews with Sizwe Nxasana, chief of First Rand, and Andrew Bonamour, of Times Media Group.
PwC says most chief executives in Africa feel confident about their approach to managing risk despite some volatility and uncertainty. Although 84 percent of the those polled are confident overall, only 40 percent are “very confident”.
“Chief executives acknowledge that a lot more needs to be done in terms of transforming the continent’s potential for exponential growth into tangible business opportunities. They are looking on multiple fronts for growth opportunities.
“For many, the search for growth will not be an easy task,” said Kana.
They rank technological advances (69 percent), urbanisation (67 percent) and demographic shifts (63 percent) as the top three defining trends that will transform their businesses over the next five years.
They are aware of the implications of these changes for their businesses, as well as the outlook for Africa.
“Everyday breakthroughs in frontiers of research and development are opening up new opportunities for businesses. As technologies progress, they will generate more improvements in efficiency and productivity. In turn, these advances are expected to trigger a strong acceleration in economic growth towards the end of the coming decade,” said Kana.
Confidence is on the rise among Africa’s chief executives.
In general, however, they are more confident about their own company’s growth than they are about prospects for their industry.
The report says while less than half are “very confident” about their company’s growth prospects in the short term, less than a third (26 percent) are “very confident” about industry growth.
They say their desire to create something is what drives their organisation’s strategic planning.
They rank products or service innovation (31 percent), increased share in existing markets (27 percent), and new geographic markets (20 percent), as opportunities for growth but are concerned about shifts in consumer spending and behaviours.
Going forward, they say they will be more actively looking for partners, while keeping an eye on costs.
Almost half of the chief executives surveyed plan to initiate a new strategic alliance or joint venture in the next 12 months, and nearly a third are anticipating an acquisition, mainly in their home country or elsewhere in Africa.
China is emerging as key for consideration for growth prospects, followed by the US and South Africa, respectively.
PwC says this is an indication of overall better economic prospects, higher availability of finance, and the growing presence of potential local and international partners attracted by the continent’s potential.
“We are also seeing more use of technological innovation and products, with no less than 91 percent of African chief executives either recognising the need to change their investments or in the process of doing so.
Similarly, 85 percent said the same about data analytics,” said Kana.
Infrastructure is important in driving economic growth and employment on the continent.
But 45 percent of the chief executives believe their governments have been ineffective in improving their country’s basic infrastructure, such as electricity, water supply, transport and housing.
They also identified the creation of a skilled workforce (64 percent), the reduction of poverty and inequality (62 percent), and creating more jobs for young people (74 percent) as areas in which governments should be taking more decisive action and creating a business-friendly environment.
The report shows that for the chief executive officers, government responses to over-regulation (80 percent), exchange rate volatility (79 percent), the fiscal deficit and debt burdens (78 percent), and adequate infrastructure are key areas of concern.
Other areas of concern are the increasing tax burden, slow or negative growth in developed economies and the lack of stability in capital markets.