“CEOs 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,” said Suresh Kana, Senior Partner for PwC Africa in the firm’s ‘Africa Business Agenda, 2014’.
The report is a compilation of results from 260 CEOs in Africa, as well as insights from business and public sector leaders from
18 countries. It shows that most CEOs in Africa feel confident about their approach to managing risk, despite some volatility and uncertainty.
Need for change
While 84 percent of CEOs on the continent remain confident overall, only 40 percent say they are ‘very confident’. This shows that many of them believe a lot still needs to be done to transform the opportunities and promise Africa shows to sustainable growth.
“CEOs acknowledge that a lot more needs to be done in terms of transforming the continent’s potential for exponential growth into tangible business opportunities,” says Kana.
He added that CEOs were looking on multiple fronts for growth opportunities, noting however that “for many, the search for growth will not be an easy task.”
The report noted how fast paced change in the world has become, citing series of transitions, known as global megatrends that will transform business and society.
The continent’s CEOs have identified key trends that will transform their businesses over the next five years; more reason why they are very confident of growth in the short-term.
According to the report, African CEOs rank technological advances (69 percent), urbanization (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. Many have therefore recognised the need for change or are making changes to their businesses.
“Every day 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,” comments Kana.
Company growth vs Industry growth
Confidence is on the rise among Africa’s CEOs. In general, they are more confident about their own company’s growth than they are about their industry’s prospects. 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. CEOs in Africa say that their desire to create something is what drives their organisation’s strategic planning. They rank products/service innovation (31 percent), increased share in existing markets (27 percent), followed by new geographic markets (20 percent) as opportunities for growth but are equally concerned about shifts in consumer spending and behaviours.
Going forward, African CEOs say that they will be more actively looking for partners, while keeping an eye on costs. Almost half of them 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 a key for consideration for growth prospects, followed by the US and South Africa, respectively. 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 CEOs either recognising the need to change their investments or in the process of doing so. Similarly, 85 percent said the same about data analytics,” says Kana. Following a decade of rapid urbanisation, Africa is undergoing a digital revolution. However, there are still many hurdles and obstacles to overcome to the development of digital economy on the continent – and many of these hurdles are related to the development of a stable political and legal environment for companies, citizens and investors.
The skills challenge
CEOs globally remain concerned as ever about the availability of key skills. The survey shows that nowhere is the shortage of skills more acute than in fast-growing markets such as Africa, where CEOs are particularly concerned about skills shortages (83 percent). Most CEOs expect to maintain or increase their company’s headcount over the next 12 months.
Furthermore, the competitive market for top talent influences compensation, with many companies under significant pressure to match or exceed pay conditions among peer companies to recruit or retain top talent.
African CEOs also report that they are using a range of leadership development programmes intended to develop and grow more diversity within the talent pool. “To be successful, leadership development programmes must work to grow capacity and agility among top talent,” adds Kana.
Brace up for change and Adapt
“Africa is a complex and diverse continent. Doing business on the continent can be a daunting experience for any organisation as they are faced with a myriad of uncertainties and challenges in different political, economic and legal environments,” supplied Suresh Kana, Senior Partner for PwC Africa.
“Notwithstanding the difficulties and challenges ahead, many African organisations have learnt to brace themselves and adapt quickly, overcoming many of these challenges, including mitigating the risks – and turning Africa into the next frontier of growth,” he concluded.
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