Johannesburg – Africa’s CEOs are generally more optimistic about the future prospects of their businesses, however, they are most concerned about the impact of exchange rate volatility.
This is according to PwC’s Africa Business Agenda Report, released on Tuesday. The research looks at CEOs’ attitudes about the future prospects of doing business on the continent. The findings are collected from 80 interviews with CEOs across 11 countries in Africa.
The report revealed that Africa’s CEOs are optimistic about the future, with 85% of CEOs confident that business revenues will grow in the next year.
Further statistics show that 30% of CEOs believe the global economy will improve in the next 12 months and 97% of CEOs expect their businesses to grow in the medium term.
More than half (51%) of CEOs plan to employ more staff, but 23% expect to cut their headcount. This reduction will be attributed to the inclusion of automation and technologies for operations, the report explained.
However despite this optimism, the majority (90%) of CEOs said they were concerned about exchange rate volatility. This is 20 percentage points higher than the global average of 70%.
Social instability is the second-greatest concern, with 85% of Africa’s CEOs being worried. Globally, only 68% of CEOs are concerned about social instability. CEOs believe this social instability has come about as a result of inequality, increasing tax burdens, a lack of economic diversity and over-dependence on natural resources and corruption.
Africa’s CEOs (79%) are equally concerned about geopolitical instability as they are about unemployment. However, globally unemployment is not as big a concern (45%).
Climate change is also topical for Africa’s CEOs (64%), 14 percentage points higher than the average of 50%.
Lagging infrastructure development remains a risk, and 69% of Africa’s CEOs are concerned about adequate basic infrastructure.
Over regulation is another concern, with 46% of CEOs being “extremely concerned”.
The higher optimism reflected in this report is due to CEOs having learnt to look for the “upside” and to seize opportunities despite uncertain conditions. Given the low growth environment, CEOs have prioritised investment and strategic alliances or joint ventures in order to grow, the report stated.
About 80% of Africa’s CEOs are focusing on organic growth and 69% are considering new alliances to achieve growth.
The CEOs are also considering opportunities in international markets. The top three countries for growth are the US (31%), China (28%) and the UK (24%). As for African cities which offer growth opportunities, Johannesburg (36%), Lagos (16%) and Cape Town (14%) are regarded the top three.